Correlation Between Australian Agricultural and Argo Investments
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Argo Investments 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 Australian Agricultural and Argo Investments into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Argo Investments, you can compare the effects of market volatilities on Australian Agricultural and Argo Investments 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 Australian Agricultural with a short position of Argo Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Argo Investments.
Diversification Opportunities for Australian Agricultural and Argo Investments
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Argo is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Argo Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Argo Investments and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with Argo Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Argo Investments has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Argo Investments go up and down completely randomly.
Pair Corralation between Australian Agricultural and Argo Investments
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Argo Investments. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.12 times less risky than Argo Investments. The stock trades about -0.22 of its potential returns per unit of risk. The Argo Investments is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 895.00 in Argo Investments on October 25, 2024 and sell it today you would earn a total of 12.00 from holding Argo Investments or generate 1.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Argo Investments
Performance |
| Timeline |
| Australian Agricultural |
| Argo Investments |
Australian Agricultural and Argo Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Argo Investments
The main advantage of trading using opposite Australian Agricultural and Argo Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Argo Investments 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 Argo Investments will offset losses from the drop in Argo Investments' long position.| Australian Agricultural vs. Sky Metals | Australian Agricultural vs. Vulcan Steel | Australian Agricultural vs. Champion Iron | Australian Agricultural vs. Ironbark Capital |
| Argo Investments vs. Perpetual Credit Income | Argo Investments vs. Bank of Queensland | Argo Investments vs. Australian Agricultural | Argo Investments vs. Finexia Financial Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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