Correlation Between Hosken Consolidated and Rex Trueform

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

Diversification Opportunities for Hosken Consolidated and Rex Trueform

-0.15

Correlation Coefficient

Hosken Consolidated  Rex Trueform

Good diversification

The 3 months correlation between Hosken and Rex is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Hosken Consolidated Investment and Rex Trueform Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rex Trueform Group 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 Rex Trueform. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rex Trueform Group has no effect on the direction of Hosken Consolidated i.e., Hosken Consolidated and Rex Trueform go up and down completely randomly.

Pair Corralation between Hosken Consolidated and Rex Trueform

Assuming the 90 days trading horizon Hosken Consolidated Investments is expected to under-perform the Rex Trueform. In addition to that, Hosken Consolidated is 1.55 times more volatile than Rex Trueform Group. It trades about -0.07 of its total potential returns per unit of risk. Rex Trueform Group is currently generating about -0.1 per unit of volatility. If you would invest  125,000  in Rex Trueform Group on September 5, 2024 and sell it today you would lose (7,800) from holding Rex Trueform Group or give up 6.24% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Hosken Consolidated Investment  vs.  Rex Trueform Group

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 weak 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.

Rex Trueform Group

Risk-Adjusted Performance

0 of 100

Very Weak

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

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

The idea behind Hosken Consolidated Investments and Rex Trueform Group 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.

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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.