Correlation Between Highlight Communications and Progressive

Can any of the company-specific risk be diversified away by investing in both Highlight Communications and Progressive 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 Progressive 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 The Progressive, you can compare the effects of market volatilities on Highlight Communications and Progressive 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 Progressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Highlight Communications and Progressive.

Diversification Opportunities for Highlight Communications and Progressive

-0.18

Correlation Coefficient

Highlight Communications  Progressive

Good diversification

The 3 months correlation between Highlight and Progressive is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and The Progressive in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Progressive 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 Progressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Progressive has no effect on the direction of Highlight Communications i.e., Highlight Communications and Progressive go up and down completely randomly.

Pair Corralation between Highlight Communications and Progressive

Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the Progressive. In addition to that, Highlight Communications is 2.84 times more volatile than The Progressive. It trades about -0.08 of its total potential returns per unit of risk. The Progressive is currently generating about 0.13 per unit of volatility. If you would invest  22,780  in The Progressive on September 2, 2024 and sell it today you would earn a total of  2,845  from holding The Progressive or generate 12.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Highlight Communications AG  vs.  The Progressive

Highlight Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Highlight Communications AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Progressive

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Progressive are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Progressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Highlight Communications and Progressive

The main advantage of trading using opposite Highlight Communications and Progressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Highlight Communications position performs unexpectedly, Progressive 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 Progressive will offset losses from the drop in Progressive's long position.

The idea behind Highlight Communications AG and The Progressive 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..