Correlation Between Herald Investment and MOL Hungarian
Can any of the company-specific risk be diversified away by investing in both Herald Investment and MOL Hungarian 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 MOL Hungarian 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 MOL Hungarian Oil, you can compare the effects of market volatilities on Herald Investment and MOL Hungarian 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 MOL Hungarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and MOL Hungarian.
Diversification Opportunities for Herald Investment and MOL Hungarian
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Herald and MOL is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and MOL Hungarian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOL Hungarian Oil 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 MOL Hungarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOL Hungarian Oil has no effect on the direction of Herald Investment i.e., Herald Investment and MOL Hungarian go up and down completely randomly.
Pair Corralation between Herald Investment and MOL Hungarian
Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.27 times more return on investment than MOL Hungarian. However, Herald Investment Trust is 3.65 times less risky than MOL Hungarian. It trades about 0.64 of its potential returns per unit of risk. MOL Hungarian Oil is currently generating about 0.01 per unit of risk. If you would invest 217,500 in Herald Investment Trust on September 13, 2024 and sell it today you would earn a total of 26,500 from holding Herald Investment Trust or generate 12.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Herald Investment Trust vs. MOL Hungarian Oil
Performance |
| Timeline |
| Herald Investment Trust |
| MOL Hungarian Oil |
Herald Investment and MOL Hungarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and MOL Hungarian
The main advantage of trading using opposite Herald Investment and MOL Hungarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, MOL Hungarian 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 MOL Hungarian will offset losses from the drop in MOL Hungarian's long position.| Herald Investment vs. Vienna Insurance Group | Herald Investment vs. LPKF Laser Electronics | Herald Investment vs. Odyssean Investment Trust | Herald Investment vs. Electronic Arts |
| MOL Hungarian vs. Samsung Electronics Co | MOL Hungarian vs. Samsung Electronics Co | MOL Hungarian vs. Hyundai Motor | MOL Hungarian vs. Reliance Industries Ltd |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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