Correlation Between Herald Investment and Technicolor

Can any of the company-specific risk be diversified away by investing in both Herald Investment and Technicolor 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 Technicolor 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 Technicolor, you can compare the effects of market volatilities on Herald Investment and Technicolor 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 Technicolor. Check out your portfolio center. Please also check ongoing floating volatility patterns of Herald Investment and Technicolor.

Diversification Opportunities for Herald Investment and Technicolor

-0.77

Correlation Coefficient

Herald Investment  Technicolor

Pay attention - limited upside

The 3 months correlation between Herald and Technicolor is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Technicolor in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Technicolor 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 Technicolor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Technicolor has no effect on the direction of Herald Investment i.e., Herald Investment and Technicolor go up and down completely randomly.

Pair Corralation between Herald Investment and Technicolor

Assuming the 90 days trading horizon Herald Investment Trust is expected to under-perform the Technicolor. But the stock apears to be less risky and, when comparing its historical volatility, Herald Investment Trust is 4.66 times less risky than Technicolor. The stock trades about -0.22 of its potential returns per unit of risk. The Technicolor is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  12.00  in Technicolor on December 24, 2024 and sell it today you would earn a total of  5.00  from holding Technicolor or generate 41.67% 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.  Technicolor

Herald Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Herald Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Technicolor

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Technicolor are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Technicolor unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Herald Investment and Technicolor

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

The idea behind Herald Investment Trust and Technicolor 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.