Correlation Between State Bank and Herald Investment

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Can any of the company-specific risk be diversified away by investing in both State Bank and Herald Investment 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 State Bank and Herald Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Bank of and Herald Investment Trust, you can compare the effects of market volatilities on State Bank and Herald Investment 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 State Bank with a short position of Herald Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Bank and Herald Investment.

Diversification Opportunities for State Bank and Herald Investment

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between State and Herald is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding State Bank of and Herald Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Herald Investment Trust and State Bank 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 State Bank of are associated (or correlated) with Herald Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Herald Investment Trust has no effect on the direction of State Bank i.e., State Bank and Herald Investment go up and down completely randomly.

Pair Corralation between State Bank and Herald Investment

Assuming the 90 days trading horizon State Bank of is expected to under-perform the Herald Investment. But the stock apears to be less risky and, when comparing its historical volatility, State Bank of is 1.02 times less risky than Herald Investment. The stock trades about -0.67 of its potential returns per unit of risk. The Herald Investment Trust is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  250,000  in Herald Investment Trust on October 17, 2024 and sell it today you would lose (500.00) from holding Herald Investment Trust or give up 0.2% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

State Bank of  vs.  Herald Investment Trust

 Performance 
       Timeline  
State Bank 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days State Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.
Herald Investment Trust 

Risk-Adjusted Performance

19 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Herald Investment Trust are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Herald Investment exhibited solid returns over the last few months and may actually be approaching a breakup point.

State Bank and Herald Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with State Bank and Herald Investment

The main advantage of trading using opposite State Bank and Herald Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Bank position performs unexpectedly, Herald Investment 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 Herald Investment will offset losses from the drop in Herald Investment's long position.
The idea behind State Bank of and Herald Investment Trust 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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