Correlation Between Huber Capital and Multimedia Portfolio

Can any of the company-specific risk be diversified away by investing in both Huber Capital and Multimedia Portfolio 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 Huber Capital and Multimedia Portfolio into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Huber Capital Equity and Multimedia Portfolio Multimedia, you can compare the effects of market volatilities on Huber Capital and Multimedia Portfolio 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 Huber Capital with a short position of Multimedia Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Huber Capital and Multimedia Portfolio.

Diversification Opportunities for Huber Capital and Multimedia Portfolio

0.33

Correlation Coefficient

Huber Capital  Multimedia Portfolio

Weak diversification

The 3 months correlation between Huber and Multimedia is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Huber Capital Equity and Multimedia Portfolio Multimedi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimedia Portfolio and Huber Capital 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 Huber Capital Equity are associated (or correlated) with Multimedia Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimedia Portfolio has no effect on the direction of Huber Capital i.e., Huber Capital and Multimedia Portfolio go up and down completely randomly.

Pair Corralation between Huber Capital and Multimedia Portfolio

Assuming the 90 days horizon Huber Capital Equity is expected to under-perform the Multimedia Portfolio. But the mutual fund apears to be less risky and, when comparing its historical volatility, Huber Capital Equity is 1.55 times less risky than Multimedia Portfolio. The mutual fund trades about -0.24 of its potential returns per unit of risk. The Multimedia Portfolio Multimedia is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  11,366  in Multimedia Portfolio Multimedia on October 5, 2024 and sell it today you would lose (134.00) from holding Multimedia Portfolio Multimedia or give up 1.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Huber Capital Equity  vs.  Multimedia Portfolio Multimedi

Huber Capital Equity

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Equity are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Huber Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Multimedia Portfolio

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Multimedia Portfolio Multimedia are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Multimedia Portfolio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Huber Capital and Multimedia Portfolio

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

The idea behind Huber Capital Equity and Multimedia Portfolio Multimedia 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.