Correlation Between INTER CARS and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both INTER CARS 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 INTER CARS and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between INTER CARS SA and Australian Agricultural, you can compare the effects of market volatilities on INTER CARS 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 INTER CARS with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of INTER CARS and Australian Agricultural.
Diversification Opportunities for INTER CARS and Australian Agricultural
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between INTER and Australian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding INTER CARS SA and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and INTER CARS 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 INTER CARS SA 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 INTER CARS i.e., INTER CARS and Australian Agricultural go up and down completely randomly.
Pair Corralation between INTER CARS and Australian Agricultural
Assuming the 90 days horizon INTER CARS SA is expected to under-perform the Australian Agricultural. In addition to that, INTER CARS is 1.08 times more volatile than Australian Agricultural. It trades about -0.03 of its total potential returns per unit of risk. Australian Agricultural is currently generating about 0.01 per unit of volatility. If you would invest 84.00 in Australian Agricultural on September 4, 2024 and sell it today you would earn a total of 0.00 from holding Australian Agricultural or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
INTER CARS SA vs. Australian Agricultural
Performance |
| Timeline |
| INTER CARS SA |
| Australian Agricultural |
INTER CARS and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with INTER CARS and Australian Agricultural
The main advantage of trading using opposite INTER CARS and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INTER CARS 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.| INTER CARS vs. PT Astra International | INTER CARS vs. Superior Plus Corp | INTER CARS vs. NMI Holdings | INTER CARS vs. Origin Agritech |
| 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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