Correlation Between INKON Life and Australian Oilseeds

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Can any of the company-specific risk be diversified away by investing in both INKON Life and Australian Oilseeds 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 INKON Life and Australian Oilseeds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INKON Life Technology and Australian Oilseeds Holdings, you can compare the effects of market volatilities on INKON Life and Australian Oilseeds 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 INKON Life with a short position of Australian Oilseeds. Check out your portfolio center. Please also check ongoing floating volatility patterns of INKON Life and Australian Oilseeds.

Diversification Opportunities for INKON Life and Australian Oilseeds

-0.3
  Correlation Coefficient

Very good diversification

The 3 months correlation between INKON and Australian is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding INKON Life Technology and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds and INKON Life 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 INKON Life Technology are associated (or correlated) with Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of INKON Life i.e., INKON Life and Australian Oilseeds go up and down completely randomly.

Pair Corralation between INKON Life and Australian Oilseeds

Assuming the 90 days trading horizon INKON Life Technology is expected to generate 0.54 times more return on investment than Australian Oilseeds. However, INKON Life Technology is 1.86 times less risky than Australian Oilseeds. It trades about 0.01 of its potential returns per unit of risk. Australian Oilseeds Holdings is currently generating about -0.06 per unit of risk. If you would invest  1,109  in INKON Life Technology on September 2, 2024 and sell it today you would lose (106.00) from holding INKON Life Technology or give up 9.56% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy96.37%
ValuesDaily Returns

INKON Life Technology  vs.  Australian Oilseeds Holdings

 Performance 
       Timeline  
INKON Life Technology 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in INKON Life Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, INKON Life sustained solid returns over the last few months and may actually be approaching a breakup point.
Australian Oilseeds 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Australian Oilseeds Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Australian Oilseeds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

INKON Life and Australian Oilseeds Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with INKON Life and Australian Oilseeds

The main advantage of trading using opposite INKON Life and Australian Oilseeds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INKON Life position performs unexpectedly, Australian Oilseeds 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 Oilseeds will offset losses from the drop in Australian Oilseeds' long position.
The idea behind INKON Life Technology and Australian Oilseeds Holdings 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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