Correlation Between Hiscox and Victrex Plc

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

By analyzing existing cross correlation between Hiscox and Victrex plc, you can compare the effects of market volatilities on Hiscox and Victrex Plc 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 Victrex Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hiscox and Victrex Plc.

Diversification Opportunities for Hiscox and Victrex Plc

-0.57

Correlation Coefficient

Hiscox  Victrex Plc

Excellent diversification

The 3 months correlation between Hiscox and Victrex is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Hiscox and Victrex plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Victrex 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 Victrex Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Victrex plc has no effect on the direction of Hiscox i.e., Hiscox and Victrex Plc go up and down completely randomly.

Pair Corralation between Hiscox and Victrex Plc

Assuming the 90 days trading horizon Hiscox is expected to generate 0.66 times more return on investment than Victrex Plc. However, Hiscox is 1.52 times less risky than Victrex Plc. It trades about 0.16 of its potential returns per unit of risk. Victrex plc is currently generating about -0.1 per unit of risk. If you would invest  114,071  in Hiscox on April 23, 2025 and sell it today you would earn a total of  15,929  from holding Hiscox or generate 13.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Hiscox  vs.  Victrex 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.

Victrex plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Victrex plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in August 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Hiscox and Victrex Plc

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

The idea behind Hiscox and Victrex 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.