Correlation Between Smithson Investment and Albion Technology

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

Diversification Opportunities for Smithson Investment and Albion Technology

-0.47

Correlation Coefficient

Smithson Investment  Albion Technology

Very good diversification

The 3 months correlation between Smithson and Albion is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Smithson 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 Smithson 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 Smithson 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 Smithson Investment i.e., Smithson Investment and Albion Technology go up and down completely randomly.

Pair Corralation between Smithson Investment and Albion Technology

Assuming the 90 days trading horizon Smithson Investment Trust is expected to under-perform the Albion Technology. In addition to that, Smithson Investment is 1.12 times more volatile than Albion Technology General. It trades about -0.09 of its total potential returns per unit of risk. Albion Technology General is currently generating about -0.05 per unit of volatility. If you would invest  6,850  in Albion Technology General on September 27, 2024 and sell it today you would lose (50.00) from holding Albion Technology General or give up 0.73% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Smithson Investment Trust  vs.  Albion Technology General

Smithson Investment Trust

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Smithson Investment Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Smithson Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Albion Technology General

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Albion Technology General has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Smithson Investment and Albion Technology

The main advantage of trading using opposite Smithson Investment and Albion Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smithson 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 Smithson 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.

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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.