Correlation Between Hosken Consolidated and Arrowhead Properties

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

Diversification Opportunities for Hosken Consolidated and Arrowhead Properties

-0.57

Correlation Coefficient

Hosken Consolidated  Arrowhead Properties

Excellent diversification

The 3 months correlation between Hosken and Arrowhead is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and Arrowhead Properties Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Arrowhead Properties 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 Arrowhead Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Arrowhead Properties has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and Arrowhead Properties go up and down completely randomly.

Pair Corralation between Hosken Consolidated and Arrowhead Properties

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to generate 0.71 times more return on investment than Arrowhead Properties. However, Hosken Consolidated Investments is 1.42 times less risky than Arrowhead Properties. It trades about -0.14 of its potential returns per unit of risk. Arrowhead Properties Ltd is currently generating about -0.27 per unit of risk. If you would invest  1,648,400  in Hosken Consolidated Investments on October 23, 2024 and sell it today you would lose (45,200) from holding Hosken Consolidated Investments or give up 2.74% of portfolio value over 90 days.

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

Hosken Consolidated Investment  vs.  Arrowhead Properties Ltd

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 weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Arrowhead Properties

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Hosken Consolidated Investments and Arrowhead Properties Ltd 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.