Correlation Between Highlight Communications and NVR

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

Diversification Opportunities for Highlight Communications and NVR

-0.07

Correlation Coefficient

Highlight Communications  NVR

Good diversification

The 3 months correlation between Highlight and NVR is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Highlight Communications AG and NVR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NVR 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 NVR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NVR Inc has no effect on the direction of Highlight Communications i.e., Highlight Communications and NVR go up and down completely randomly.

Pair Corralation between Highlight Communications and NVR

Assuming the 90 days trading horizon Highlight Communications AG is expected to under-perform the NVR. In addition to that, Highlight Communications is 1.22 times more volatile than NVR Inc. It trades about -0.19 of its total potential returns per unit of risk. NVR Inc is currently generating about 0.08 per unit of volatility. If you would invest  610,000  in NVR Inc on May 7, 2025 and sell it today you would earn a total of  55,000  from holding NVR Inc or generate 9.02% 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.  NVR Inc

Highlight Communications

Risk-Adjusted Performance

Weakest

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 September 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

NVR Inc

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in NVR Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, NVR may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Highlight Communications and NVR

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

The idea behind Highlight Communications AG and NVR 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.