Correlation Between Microchip Technology and Highlight Communications
Can any of the company-specific risk be diversified away by investing in both Microchip Technology and Highlight Communications 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 Microchip Technology and Highlight Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microchip Technology Incorporated and Highlight Communications AG, you can compare the effects of market volatilities on Microchip Technology and Highlight Communications 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 Microchip Technology with a short position of Highlight Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microchip Technology and Highlight Communications.
Diversification Opportunities for Microchip Technology and Highlight Communications
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microchip and Highlight is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora and Highlight Communications AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Highlight Communications and Microchip Technology 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 Microchip Technology Incorporated are associated (or correlated) with Highlight Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Highlight Communications has no effect on the direction of Microchip Technology i.e., Microchip Technology and Highlight Communications go up and down completely randomly.
Pair Corralation between Microchip Technology and Highlight Communications
Assuming the 90 days horizon Microchip Technology is expected to generate 46.5 times less return on investment than Highlight Communications. But when comparing it to its historical volatility, Microchip Technology Incorporated is 1.15 times less risky than Highlight Communications. It trades about 0.0 of its potential returns per unit of risk. Highlight Communications AG is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 122.00 in Highlight Communications AG on September 7, 2025 and sell it today you would earn a total of 19.00 from holding Highlight Communications AG or generate 15.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microchip Technology Incorpora vs. Highlight Communications AG
Performance |
| Timeline |
| Microchip Technology |
| Highlight Communications |
Microchip Technology and Highlight Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microchip Technology and Highlight Communications
The main advantage of trading using opposite Microchip Technology and Highlight Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microchip Technology position performs unexpectedly, Highlight Communications 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 Highlight Communications will offset losses from the drop in Highlight Communications' long position.| Microchip Technology vs. NVIDIA | Microchip Technology vs. NVIDIA | Microchip Technology vs. Taiwan Semiconductor Manufacturing | Microchip Technology vs. Broadcom |
Check out your portfolio center.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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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