Correlation Between Caledonia Investments and Albion Technology
Can any of the company-specific risk be diversified away by investing in both Caledonia Investments and Albion Technology 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 Caledonia Investments and Albion Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caledonia Investments and Albion Technology General, you can compare the effects of market volatilities on Caledonia Investments and Albion Technology 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 Caledonia Investments with a short position of Albion Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caledonia Investments and Albion Technology.
Diversification Opportunities for Caledonia Investments and Albion Technology
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Caledonia and Albion is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Caledonia Investments and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General and Caledonia Investments 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 Caledonia Investments are associated (or correlated) with Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Caledonia Investments i.e., Caledonia Investments and Albion Technology go up and down completely randomly.
Pair Corralation between Caledonia Investments and Albion Technology
Assuming the 90 days trading horizon Caledonia Investments is expected to generate 5.61 times more return on investment than Albion Technology. However, Caledonia Investments is 5.61 times more volatile than Albion Technology General. It trades about 0.22 of its potential returns per unit of risk. Albion Technology General is currently generating about -0.23 per unit of risk. If you would invest 350,500 in Caledonia Investments on October 20, 2024 and sell it today you would earn a total of 14,500 from holding Caledonia Investments or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Caledonia Investments vs. Albion Technology General
Performance |
| Timeline |
| Caledonia Investments |
| Albion Technology General |
Caledonia Investments and Albion Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caledonia Investments and Albion Technology
The main advantage of trading using opposite Caledonia Investments and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caledonia Investments position performs unexpectedly, Albion Technology 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 Albion Technology will offset losses from the drop in Albion Technology's long position.| Caledonia Investments vs. Bioventix | Caledonia Investments vs. VeriSign | Caledonia Investments vs. Games Workshop Group | Caledonia Investments vs. AJ Bell plc |
| Albion Technology vs. Tatton Asset Management | Albion Technology vs. JLEN Environmental Assets | Albion Technology vs. Cairo Communication SpA | Albion Technology vs. Jupiter Fund Management |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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