Correlation Between Hiscox and Angling Direct

Can any of the company-specific risk be diversified away by investing in both Hiscox and Angling Direct 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 Hiscox and Angling Direct into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hiscox and Angling Direct PLC, you can compare the effects of market volatilities on Hiscox and Angling Direct 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 Hiscox with a short position of Angling Direct. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hiscox and Angling Direct.

Diversification Opportunities for Hiscox and Angling Direct

0.82

Correlation Coefficient

Hiscox  Angling Direct

Very poor diversification

The 3 months correlation between Hiscox and Angling is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Hiscox and Angling Direct PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Angling Direct PLC and Hiscox 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 Hiscox are associated (or correlated) with Angling Direct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Angling Direct PLC has no effect on the direction of Hiscox i.e., Hiscox and Angling Direct go up and down completely randomly.

Pair Corralation between Hiscox and Angling Direct

Assuming the 90 days trading horizon Hiscox is expected to generate 2.1 times less return on investment than Angling Direct. But when comparing it to its historical volatility, Hiscox is 1.49 times less risky than Angling Direct. It trades about 0.16 of its potential returns per unit of risk. Angling Direct PLC is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,500  in Angling Direct PLC on April 23, 2025 and sell it today you would earn a total of  1,100  from holding Angling Direct PLC or generate 31.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Hiscox  vs.  Angling Direct PLC

Hiscox

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hiscox are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Hiscox exhibited solid returns over the last few months and may actually be approaching a breakup point.

Angling Direct PLC

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Angling Direct PLC are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Angling Direct exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hiscox and Angling Direct

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

The idea behind Hiscox and Angling Direct PLC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.