Correlation Between Herald Investment and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Herald Investment and Hansa Investment 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 Hansa Investment 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 Hansa Investment, you can compare the effects of market volatilities on Herald Investment and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Hansa Investment.
Diversification Opportunities for Herald Investment and Hansa Investment
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Herald and Hansa is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Herald Investment i.e., Herald Investment and Hansa Investment go up and down completely randomly.
Pair Corralation between Herald Investment and Hansa Investment
Assuming the 90 days trading horizon Herald Investment is expected to generate 1.08 times less return on investment than Hansa Investment. But when comparing it to its historical volatility, Herald Investment Trust is 1.61 times less risky than Hansa Investment. It trades about 0.08 of its potential returns per unit of risk. Hansa Investment is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 16,946 in Hansa Investment on August 26, 2024 and sell it today you would earn a total of 5,654 from holding Hansa Investment or generate 33.36% 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. Hansa Investment
Performance |
| Timeline |
| Herald Investment Trust |
| Hansa Investment |
Herald Investment and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Herald Investment and Hansa Investment
The main advantage of trading using opposite Herald Investment and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Herald Investment position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Herald Investment vs. Monks Investment Trust | Herald Investment vs. Federal Realty Investment | Herald Investment vs. Livermore Investments Group | Herald Investment vs. Lords Grp Trading |
| Hansa Investment vs. CATCo Reinsurance Opportunities | Hansa Investment vs. BH Macro Limited | Hansa Investment vs. TMT Investments PLC | Hansa Investment vs. Intermediate Capital Group |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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