Correlation Between Hosken Consolidated and Bidvest

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

Diversification Opportunities for Hosken Consolidated and Bidvest

0.09

Correlation Coefficient

Hosken Consolidated  Bidvest

Significant diversification

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

Pair Corralation between Hosken Consolidated and Bidvest

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the Bidvest. In addition to that, Hosken Consolidated is 1.21 times more volatile than Bidvest Group. It trades about -0.07 of its total potential returns per unit of risk. Bidvest Group is currently generating about 0.04 per unit of volatility. If you would invest  2,709,549  in Bidvest Group on September 13, 2024 and sell it today you would earn a total of  81,451  from holding Bidvest Group or generate 3.01% 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.  Bidvest Group

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.

Bidvest Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Bidvest Group are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, Bidvest is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hosken Consolidated and Bidvest

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

The idea behind Hosken Consolidated Investments and Bidvest Group 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.