Correlation Between Herald Investment and TR Property

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

Diversification Opportunities for Herald Investment and TR Property

0.6

Correlation Coefficient

Herald Investment  TR Property

Poor diversification

The 3 months correlation between Herald and TRY is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Herald Investment Trust and TR Property Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TR Property 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 TR Property. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TR Property Investment has no effect on the direction of Herald Investment i.e., Herald Investment and TR Property go up and down completely randomly.

Pair Corralation between Herald Investment and TR Property

Assuming the 90 days trading horizon Herald Investment Trust is expected to under-perform the TR Property. But the stock apears to be less risky and, when comparing its historical volatility, Herald Investment Trust is 1.01 times less risky than TR Property. The stock trades about -0.23 of its potential returns per unit of risk. The TR Property Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  31,000  in TR Property Investment on December 30, 2024 and sell it today you would lose (1,250) from holding TR Property Investment or give up 4.03% of portfolio value over 90 days.

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

Herald Investment Trust  vs.  TR Property Investment

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.

TR Property Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days TR Property Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, TR Property is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Herald Investment and TR Property

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

The idea behind Herald Investment Trust and TR Property Investment 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.