Correlation Between Hosken Consolidated and African Rainbow
Can any of the company-specific risk be diversified away by investing in both Hosken Consolidated and African Rainbow 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 African Rainbow 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 African Rainbow Minerals, you can compare the effects of market volatilities on Hosken Consolidated and African Rainbow 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 African Rainbow. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hosken Consolidated and African Rainbow.
Diversification Opportunities for Hosken Consolidated and African Rainbow
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hosken and African is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and African Rainbow Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on African Rainbow Minerals 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 African Rainbow. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of African Rainbow Minerals has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and African Rainbow go up and down completely randomly.
Pair Corralation between Hosken Consolidated and African Rainbow
Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the African Rainbow. But the stock apears to be less risky and, when comparing its historical volatility, Hosken Consolidated Investments is 1.11 times less risky than African Rainbow. The stock trades about -0.1 of its potential returns per unit of risk. The African Rainbow Minerals is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,513,800 in African Rainbow Minerals on October 23, 2024 and sell it today you would earn a total of 48,600 from holding African Rainbow Minerals or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.74% |
| Values | Daily Returns |
Hosken Consolidated Investment vs. African Rainbow Minerals
Performance |
| Timeline |
| Hosken Consolidated |
| African Rainbow Minerals |
Hosken Consolidated and African Rainbow Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hosken Consolidated and African Rainbow
The main advantage of trading using opposite Hosken Consolidated and African Rainbow positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hosken Consolidated position performs unexpectedly, African Rainbow 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 African Rainbow will offset losses from the drop in African Rainbow's long position.| Hosken Consolidated vs. Harmony Gold Mining | Hosken Consolidated vs. City Lodge Hotels | Hosken Consolidated vs. Zeder Investments | Hosken Consolidated vs. Brimstone Investment |
| African Rainbow vs. British American Tobacco | African Rainbow vs. CA Sales Holdings | African Rainbow vs. Zeder Investments | African Rainbow vs. Life Healthcare |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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