Correlation Between Coles and Hub24
Can any of the company-specific risk be diversified away by investing in both Coles and Hub24 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 Coles and Hub24 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coles Group and Hub24, you can compare the effects of market volatilities on Coles and Hub24 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 Coles with a short position of Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Hub24.
Diversification Opportunities for Coles and Hub24
Excellent diversification
The 3 months correlation between Coles and Hub24 is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 and Coles 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 Coles Group are associated (or correlated) with Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Coles i.e., Coles and Hub24 go up and down completely randomly.
Pair Corralation between Coles and Hub24
Assuming the 90 days trading horizon Coles is expected to generate 4.0 times less return on investment than Hub24. But when comparing it to its historical volatility, Coles Group is 1.71 times less risky than Hub24. It trades about 0.13 of its potential returns per unit of risk. Hub24 is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 4,349 in Hub24 on September 1, 2024 and sell it today you would earn a total of 3,188 from holding Hub24 or generate 73.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coles Group vs. Hub24
Performance |
| Timeline |
| Coles Group |
| Hub24 |
Coles and Hub24 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coles and Hub24
The main advantage of trading using opposite Coles and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coles position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.The idea behind Coles Group and Hub24 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.| Hub24 vs. Pinnacle Investment Management | Hub24 vs. Alternative Investment Trust | Hub24 vs. REGAL ASIAN INVESTMENTS | Hub24 vs. Healthco Healthcare and |
Check out your portfolio center.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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Transaction History View history of all your transactions and understand their impact on performance |