Correlation Between Hosken Consolidated and AECI

Can any of the company-specific risk be diversified away by investing in both Hosken Consolidated and AECI 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 AECI 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 AECI, you can compare the effects of market volatilities on Hosken Consolidated and AECI 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 AECI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hosken Consolidated and AECI.

Diversification Opportunities for Hosken Consolidated and AECI

0.09

Correlation Coefficient

Hosken Consolidated  AECI

Significant diversification

The 3 months correlation between Hosken and AECI is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and AECI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AECI 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 AECI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AECI has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and AECI go up and down completely randomly.

Pair Corralation between Hosken Consolidated and AECI

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to generate 0.03 times more return on investment than AECI. However, Hosken Consolidated Investments is 37.52 times less risky than AECI. It trades about -0.1 of its potential returns per unit of risk. AECI is currently generating about -0.16 per unit of risk. If you would invest  1,769,400  in Hosken Consolidated Investments on October 10, 2024 and sell it today you would lose (166,800) from holding Hosken Consolidated Investments or give up 9.43% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Hosken Consolidated Investment  vs.  AECI

Hosken Consolidated

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hosken Consolidated Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

AECI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AECI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Hosken Consolidated and AECI

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

The idea behind Hosken Consolidated Investments and AECI 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.