Correlation Between Australian Agricultural and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Aneka Tambang 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 Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Aneka Tambang Tbk, you can compare the effects of market volatilities on Australian Agricultural and Aneka Tambang 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 Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Aneka Tambang.
Diversification Opportunities for Australian Agricultural and Aneka Tambang
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Australian and Aneka is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk 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 Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Aneka Tambang go up and down completely randomly.
Pair Corralation between Australian Agricultural and Aneka Tambang
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Aneka Tambang. In addition to that, Australian Agricultural is 1.26 times more volatile than Aneka Tambang Tbk. It trades about -0.02 of its total potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.01 per unit of volatility. If you would invest 97.00 in Aneka Tambang Tbk on August 29, 2024 and sell it today you would lose (11.00) from holding Aneka Tambang Tbk or give up 11.34% 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. Aneka Tambang Tbk
Performance |
| Timeline |
| Australian Agricultural |
| Aneka Tambang Tbk |
Australian Agricultural and Aneka Tambang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Aneka Tambang
The main advantage of trading using opposite Australian Agricultural and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.| Australian Agricultural vs. PVW Resources | Australian Agricultural vs. Woolworths | Australian Agricultural vs. Wesfarmers | Australian Agricultural vs. Coles Group |
| Aneka Tambang vs. Actinogen Medical | Aneka Tambang vs. TTG Fintech | Aneka Tambang vs. IDP Education | Aneka Tambang vs. G8 Education |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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