Correlation Between Astar and Hiscox

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

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

Diversification Opportunities for Astar and Hiscox

-0.41

Correlation Coefficient

Astar  Hiscox

Very good diversification

The 3 months correlation between Astar and Hiscox is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Astar and Hiscox in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hiscox and Astar 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 Astar are associated (or correlated) with Hiscox. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hiscox has no effect on the direction of Astar i.e., Astar and Hiscox go up and down completely randomly.

Pair Corralation between Astar and Hiscox

Assuming the 90 days trading horizon Astar is expected to under-perform the Hiscox. In addition to that, Astar is 1.72 times more volatile than Hiscox. It trades about -0.18 of its total potential returns per unit of risk. Hiscox is currently generating about 0.06 per unit of volatility. If you would invest  2,775  in Hiscox on December 21, 2024 and sell it today you would earn a total of  255.00  from holding Hiscox or generate 9.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Astar  vs.  Hiscox

Astar

Risk-Adjusted Performance

Very Weak

Over the last 90 days Astar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's 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 Astar shareholders.

Hiscox

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hiscox are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating essential indicators, Hiscox may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Astar and Hiscox

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

The idea behind Astar and Hiscox 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.