Correlation Between Horizon Technology and Special Opportunities

Can any of the company-specific risk be diversified away by investing in both Horizon Technology and Special Opportunities 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 Horizon Technology and Special Opportunities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Horizon Technology Finance and Special Opportunities Closed, you can compare the effects of market volatilities on Horizon Technology and Special Opportunities 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 Horizon Technology with a short position of Special Opportunities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Horizon Technology and Special Opportunities.

Diversification Opportunities for Horizon Technology and Special Opportunities

0.58

Correlation Coefficient

Horizon Technology  Special Opportunities

Very weak diversification

The 3 months correlation between Horizon and Special is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Horizon Technology Finance and Special Opportunities Closed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Special Opportunities and Horizon Technology 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 Horizon Technology Finance are associated (or correlated) with Special Opportunities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Special Opportunities has no effect on the direction of Horizon Technology i.e., Horizon Technology and Special Opportunities go up and down completely randomly.

Pair Corralation between Horizon Technology and Special Opportunities

Given the investment horizon of 90 days Horizon Technology Finance is expected to generate 2.63 times more return on investment than Special Opportunities. However, Horizon Technology is 2.63 times more volatile than Special Opportunities Closed. It trades about 0.06 of its potential returns per unit of risk. Special Opportunities Closed is currently generating about 0.16 per unit of risk. If you would invest  715.00  in Horizon Technology Finance on May 7, 2025 and sell it today you would earn a total of  34.00  from holding Horizon Technology Finance or generate 4.76% return on investment over 90 days.

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

Horizon Technology Finance  vs.  Special Opportunities Closed

Horizon Technology

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Horizon Technology Finance are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Horizon Technology is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Special Opportunities

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Special Opportunities Closed are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of rather sound basic indicators, Special Opportunities is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Horizon Technology and Special Opportunities

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

The idea behind Horizon Technology Finance and Special Opportunities Closed 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.