Correlation Between Hosken Consolidated and ABSA Bank
Can any of the company-specific risk be diversified away by investing in both Hosken Consolidated and ABSA Bank 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 Hosken Consolidated and ABSA Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hosken Consolidated Investments and ABSA Bank Limited, you can compare the effects of market volatilities on Hosken Consolidated and ABSA Bank 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 Hosken Consolidated with a short position of ABSA Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hosken Consolidated and ABSA Bank.
Diversification Opportunities for Hosken Consolidated and ABSA Bank
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hosken and ABSA is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and ABSA Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABSA Bank Limited and Hosken Consolidated 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 Hosken Consolidated Investments are associated (or correlated) with ABSA Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABSA Bank Limited has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and ABSA Bank go up and down completely randomly.
Pair Corralation between Hosken Consolidated and ABSA Bank
Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the ABSA Bank. In addition to that, Hosken Consolidated is 1.61 times more volatile than ABSA Bank Limited. It trades about -0.06 of its total potential returns per unit of risk. ABSA Bank Limited is currently generating about 0.12 per unit of volatility. If you would invest 8,011,100 in ABSA Bank Limited on September 14, 2024 and sell it today you would earn a total of 618,900 from holding ABSA Bank Limited or generate 7.73% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Hosken Consolidated Investment vs. ABSA Bank Limited
Performance |
Timeline |
Hosken Consolidated |
ABSA Bank Limited |
Hosken Consolidated and ABSA Bank Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hosken Consolidated and ABSA Bank
The main advantage of trading using opposite Hosken Consolidated and ABSA Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hosken Consolidated position performs unexpectedly, ABSA Bank 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 ABSA Bank will offset losses from the drop in ABSA Bank's long position.Hosken Consolidated vs. Bidvest Group | Hosken Consolidated vs. Kap Industrial Holdings | Hosken Consolidated vs. Deneb Investments | Hosken Consolidated vs. Brikor |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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