Correlation Between Herald Investment and Schweiter Technologies

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

Diversification Opportunities for Herald Investment and Schweiter Technologies

0.07

Correlation Coefficient

Herald Investment  Schweiter Technologies

Significant diversification

The 3 months correlation between Herald and Schweiter is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Schweiter Technologies AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Schweiter Technologies 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 Schweiter Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Schweiter Technologies has no effect on the direction of Herald Investment i.e., Herald Investment and Schweiter Technologies go up and down completely randomly.

Pair Corralation between Herald Investment and Schweiter Technologies

Assuming the 90 days trading horizon Herald Investment Trust is expected to generate 0.62 times more return on investment than Schweiter Technologies. However, Herald Investment Trust is 1.63 times less risky than Schweiter Technologies. It trades about 0.15 of its potential returns per unit of risk. Schweiter Technologies AG is currently generating about 0.09 per unit of risk. If you would invest  208,500  in Herald Investment Trust on October 23, 2024 and sell it today you would earn a total of  25,500  from holding Herald Investment Trust or generate 12.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Herald Investment Trust  vs.  Schweiter Technologies AG

Herald Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Herald Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Schweiter Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Schweiter Technologies AG are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Schweiter Technologies may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Herald Investment and Schweiter Technologies

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

The idea behind Herald Investment Trust and Schweiter Technologies AG 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.

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 Commodity Directory module to find actively traded commodities issued by global exchanges.