Correlation Between Hosken Consolidated and Omnia Holdings

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

Diversification Opportunities for Hosken Consolidated and Omnia Holdings

-0.41

Correlation Coefficient

Hosken Consolidated  Omnia Holdings

Very good diversification

The 3 months correlation between Hosken and Omnia is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and Omnia Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Omnia Holdings 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 Omnia Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Omnia Holdings has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and Omnia Holdings go up and down completely randomly.

Pair Corralation between Hosken Consolidated and Omnia Holdings

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the Omnia Holdings. But the stock apears to be less risky and, when comparing its historical volatility, Hosken Consolidated Investments is 2.47 times less risky than Omnia Holdings. The stock trades about -0.24 of its potential returns per unit of risk. The Omnia Holdings Limited is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  720,300  in Omnia Holdings Limited on October 14, 2024 and sell it today you would lose (33,800) from holding Omnia Holdings Limited or give up 4.69% 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.  Omnia Holdings Limited

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.

Omnia Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Omnia Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Omnia Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Hosken Consolidated and Omnia Holdings

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

The idea behind Hosken Consolidated Investments and Omnia Holdings Limited 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.