Correlation Between Hosken Consolidated and City Lodge
Can any of the company-specific risk be diversified away by investing in both Hosken Consolidated and City Lodge 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 City Lodge 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 City Lodge Hotels, you can compare the effects of market volatilities on Hosken Consolidated and City Lodge 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 City Lodge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hosken Consolidated and City Lodge.
Diversification Opportunities for Hosken Consolidated and City Lodge
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hosken and City is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and City Lodge Hotels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on City Lodge Hotels 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 City Lodge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of City Lodge Hotels has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and City Lodge go up and down completely randomly.
Pair Corralation between Hosken Consolidated and City Lodge
Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to generate 0.87 times more return on investment than City Lodge. However, Hosken Consolidated Investments is 1.15 times less risky than City Lodge. It trades about 0.02 of its potential returns per unit of risk. City Lodge Hotels is currently generating about 0.01 per unit of risk. If you would invest 1,581,724 in Hosken Consolidated Investments on August 30, 2024 and sell it today you would earn a total of 197,376 from holding Hosken Consolidated Investments or generate 12.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hosken Consolidated Investment vs. City Lodge Hotels
Performance |
| Timeline |
| Hosken Consolidated |
| City Lodge Hotels |
Hosken Consolidated and City Lodge Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hosken Consolidated and City Lodge
The main advantage of trading using opposite Hosken Consolidated and City Lodge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hosken Consolidated position performs unexpectedly, City Lodge 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 City Lodge will offset losses from the drop in City Lodge's long position.| Hosken Consolidated vs. Reinet Investments SCA | Hosken Consolidated vs. Afine Investments | Hosken Consolidated vs. Harmony Gold Mining | Hosken Consolidated vs. City Lodge Hotels |
| City Lodge vs. Kumba Iron Ore | City Lodge vs. Frontier Transport Holdings | City Lodge vs. Harmony Gold Mining | City Lodge vs. HomeChoice Investments |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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