Correlation Between Hosken Consolidated and Firstrand

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

Diversification Opportunities for Hosken Consolidated and Firstrand

-0.4

Correlation Coefficient

Hosken Consolidated  Firstrand

Very good diversification

The 3 months correlation between Hosken and Firstrand is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and Firstrand in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Firstrand 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 Firstrand. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Firstrand has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and Firstrand go up and down completely randomly.

Pair Corralation between Hosken Consolidated and Firstrand

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the Firstrand. In addition to that, Hosken Consolidated is 1.31 times more volatile than Firstrand. It trades about -0.45 of its total potential returns per unit of risk. Firstrand is currently generating about 0.27 per unit of volatility. If you would invest  763,000  in Firstrand on September 18, 2024 and sell it today you would earn a total of  50,900  from holding Firstrand or generate 6.67% return on investment over 90 days.

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

Hosken Consolidated Investment  vs.  Firstrand

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.

Firstrand

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Firstrand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Firstrand 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 Firstrand

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

The idea behind Hosken Consolidated Investments and Firstrand 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.