Correlation Between Herald Investment and Albion Technology

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

Diversification Opportunities for Herald Investment and Albion Technology

-0.49

Correlation Coefficient

Herald Investment  Albion Technology

Very good diversification

The 3 months correlation between Herald and Albion is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and Albion Technology General in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Albion Technology General 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 Albion Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Albion Technology General has no effect on the direction of Herald Investment i.e., Herald Investment and Albion Technology go up and down completely randomly.

Pair Corralation between Herald Investment and Albion Technology

Assuming the 90 days trading horizon Herald Investment Trust is expected to under-perform the Albion Technology. In addition to that, Herald Investment is 2.0 times more volatile than Albion Technology General. It trades about -0.23 of its total potential returns per unit of risk. Albion Technology General is currently generating about 0.06 per unit of volatility. If you would invest  6,800  in Albion Technology General on December 30, 2024 and sell it today you would earn a total of  150.00  from holding Albion Technology General or generate 2.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Herald Investment Trust  vs.  Albion Technology General

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.

Albion Technology General

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Albion Technology General are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Albion Technology 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 Herald Investment and Albion Technology

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

The idea behind Herald Investment Trust and Albion Technology General 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.