Correlation Between Herald Investment and Indutrade
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Indutrade 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 Herald Investment and Indutrade into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Herald Investment Trust and Indutrade AB, you can compare the effects of market volatilities on Herald Investment and Indutrade 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 Herald Investment with a short position of Indutrade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Indutrade.
Diversification Opportunities for Herald Investment and Indutrade
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Herald and Indutrade is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Indutrade AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indutrade AB and Herald Investment 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 Herald Investment Trust are associated (or correlated) with Indutrade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indutrade AB has no effect on the direction of Herald Investment i.e., Herald Investment and Indutrade go up and down completely randomly.
Pair Corralation between Herald Investment and Indutrade
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.75 times more return on investment than Indutrade. However, Herald Investment Trust is 1.34 times less risky than Indutrade. It trades about 0.27 of its potential returns per unit of risk. Indutrade AB is currently generating about -0.24 per unit of risk. If you would invest 208,500 in Herald Investment Trust on August 30, 2024 and sell it today you would earn a total of 25,000 from holding Herald Investment Trust or generate 11.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. Indutrade AB
Performance |
| Timeline |
| Herald Investment Trust |
| Indutrade AB |
Herald Investment and Indutrade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Indutrade
The main advantage of trading using opposite Herald Investment and Indutrade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Indutrade 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 Indutrade will offset losses from the drop in Indutrade's long position.| Herald Investment vs. Samsung Electronics Co | Herald Investment vs. Samsung Electronics Co | Herald Investment vs. Hyundai Motor | Herald Investment vs. Toyota Motor Corp |
| Indutrade vs. Tungsten West PLC | Indutrade vs. Argo Group Limited | Indutrade vs. Hardide PLC | Indutrade vs. Versarien PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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