Correlation Between Australian Agricultural and Autosports
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Autosports 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 Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Autosports Group, you can compare the effects of market volatilities on Australian Agricultural and Autosports 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 Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Autosports.
Diversification Opportunities for Australian Agricultural and Autosports
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Autosports is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group 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 Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Autosports go up and down completely randomly.
Pair Corralation between Australian Agricultural and Autosports
Assuming the 90 days trading horizon Australian Agricultural is expected to generate 0.7 times more return on investment than Autosports. However, Australian Agricultural is 1.43 times less risky than Autosports. It trades about -0.02 of its potential returns per unit of risk. Autosports Group is currently generating about -0.1 per unit of risk. If you would invest 140.00 in Australian Agricultural on September 2, 2024 and sell it today you would lose (3.00) from holding Australian Agricultural or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Autosports Group
Performance |
| Timeline |
| Australian Agricultural |
| Autosports Group |
Australian Agricultural and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Autosports
The main advantage of trading using opposite Australian Agricultural and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Australian Agricultural vs. Aneka Tambang Tbk | Australian Agricultural vs. Commonwealth Bank of | Australian Agricultural vs. Australia and New | Australian Agricultural vs. ANZ Group Holdings |
| Autosports vs. Hotel Property Investments | Autosports vs. Diversified United Investment | Autosports vs. ACDC Metals | Autosports vs. A1 Investments Resources |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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