Correlation Between Auction Technology and Sherborne Investors

Can any of the company-specific risk be diversified away by investing in both Auction Technology and Sherborne Investors 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 Auction Technology and Sherborne Investors into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Auction Technology Group and Sherborne Investors Guernsey, you can compare the effects of market volatilities on Auction Technology and Sherborne Investors 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 Auction Technology with a short position of Sherborne Investors. Check out your portfolio center. Please also check ongoing floating volatility patterns of Auction Technology and Sherborne Investors.

Diversification Opportunities for Auction Technology and Sherborne Investors

-0.18

Correlation Coefficient

Auction Technology  Sherborne Investors

Good diversification

The 3 months correlation between Auction and Sherborne is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Auction Technology Group and Sherborne Investors Guernsey in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sherborne Investors and Auction Technology 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 Auction Technology Group are associated (or correlated) with Sherborne Investors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sherborne Investors has no effect on the direction of Auction Technology i.e., Auction Technology and Sherborne Investors go up and down completely randomly.

Pair Corralation between Auction Technology and Sherborne Investors

Assuming the 90 days trading horizon Auction Technology Group is expected to generate 2.88 times more return on investment than Sherborne Investors. However, Auction Technology is 2.88 times more volatile than Sherborne Investors Guernsey. It trades about 0.15 of its potential returns per unit of risk. Sherborne Investors Guernsey is currently generating about -0.08 per unit of risk. If you would invest  45,400  in Auction Technology Group on October 22, 2024 and sell it today you would earn a total of  12,600  from holding Auction Technology Group or generate 27.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Auction Technology Group  vs.  Sherborne Investors Guernsey

Auction Technology

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Auction Technology Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Auction Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sherborne Investors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sherborne Investors Guernsey has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Sherborne Investors is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Auction Technology and Sherborne Investors

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

The idea behind Auction Technology Group and Sherborne Investors Guernsey 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.