Correlation Between 2G ENERGY and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both 2G ENERGY and Australian Agricultural 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 2G ENERGY and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2G ENERGY and Australian Agricultural, you can compare the effects of market volatilities on 2G ENERGY and Australian Agricultural 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 2G ENERGY with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2G ENERGY and Australian Agricultural.
Diversification Opportunities for 2G ENERGY and Australian Agricultural
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between 2GB and Australian is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding 2G ENERGY and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and 2G ENERGY 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 2G ENERGY are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of 2G ENERGY i.e., 2G ENERGY and Australian Agricultural go up and down completely randomly.
Pair Corralation between 2G ENERGY and Australian Agricultural
Assuming the 90 days trading horizon 2G ENERGY is expected to generate 1.08 times more return on investment than Australian Agricultural. However, 2G ENERGY is 1.08 times more volatile than Australian Agricultural. It trades about 0.0 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 2,531 in 2G ENERGY on September 3, 2024 and sell it today you would lose (336.00) from holding 2G ENERGY or give up 13.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
2G ENERGY vs. Australian Agricultural
Performance |
| Timeline |
| 2G ENERGY |
| Australian Agricultural |
2G ENERGY and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2G ENERGY and Australian Agricultural
The main advantage of trading using opposite 2G ENERGY and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2G ENERGY position performs unexpectedly, Australian Agricultural 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 Australian Agricultural will offset losses from the drop in Australian Agricultural's long position.| 2G ENERGY vs. Hyatt Hotels | 2G ENERGY vs. MHP Hotel AG | 2G ENERGY vs. HYATT HOTELS A | 2G ENERGY vs. InterContinental Hotels Group |
| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. SalMar ASA |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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