Correlation Between Highlight Communications and Fiserv

Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Fiserv at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Highlight Communications and Fiserv into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Highlight Communications AG and Fiserv Inc, you can compare the effects of market volatilities on Highlight Communications and Fiserv and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Highlight Communications with a short position of Fiserv. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Fiserv.

Diversification Opportunities for Highlight Communications and Fiserv

0.0

Correlation Coefficient

Highlight Communications  Fiserv

Pay attention - limited upside

The 3 months correlation between Highlight and Fiserv is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and Fiserv Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fiserv Inc and Highlight Communications is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Highlight Communications AG are associated (or correlated) with Fiserv. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fiserv Inc has no effect on the direction of Highlight Communications i.e., Highlight Communications and Fiserv go up and down completely randomly.

Pair Corralation between Highlight Communications and Fiserv

Assuming the 90 days trading horizon Highlight Communications is expected to generate 3.66 times less return on investment than Fiserv. In addition to that, Highlight Communications is 1.89 times more volatile than Fiserv Inc. It trades about 0.03 of its total potential returns per unit of risk. Fiserv Inc is currently generating about 0.2 per unit of volatility. If you would invest  15,698  in Fiserv Inc on September 18, 2024 and sell it today you would earn a total of  3,876  from holding Fiserv Inc or generate 24.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Highlight Communications AG  vs.  Fiserv Inc

Highlight Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Highlight Communications AG are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Highlight Communications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Fiserv Inc

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fiserv Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fiserv reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Highlight Communications and Fiserv

The main advantage of trading using opposite Highlight Communications and Fiserv positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Fiserv can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Fiserv will offset losses from the drop in Fiserv's long position.

The idea behind Highlight Communications AG and Fiserv Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.