Correlation Between Australian Agricultural and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Dug Technology 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 Dug Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Dug Technology, you can compare the effects of market volatilities on Australian Agricultural and Dug Technology 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 Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Dug Technology.
Diversification Opportunities for Australian Agricultural and Dug Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Dug is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug Technology 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 Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Dug Technology go up and down completely randomly.
Pair Corralation between Australian Agricultural and Dug Technology
Assuming the 90 days trading horizon Australian Agricultural is expected to generate 0.28 times more return on investment than Dug Technology. However, Australian Agricultural is 3.56 times less risky than Dug Technology. It trades about -0.11 of its potential returns per unit of risk. Dug Technology is currently generating about -0.1 per unit of risk. If you would invest 141.00 in Australian Agricultural on September 1, 2024 and sell it today you would lose (4.00) from holding Australian Agricultural or give up 2.84% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Dug Technology
Performance |
| Timeline |
| Australian Agricultural |
| Dug Technology |
Australian Agricultural and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Dug Technology
The main advantage of trading using opposite Australian Agricultural and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.| Australian Agricultural vs. Retail Food Group | Australian Agricultural vs. Spirit Telecom | Australian Agricultural vs. Credit Clear | Australian Agricultural vs. Wt Financial Group |
| Dug Technology vs. Garda Diversified Ppty | Dug Technology vs. Alternative Investment Trust | Dug Technology vs. Bluescope Steel | Dug Technology vs. Hudson Investment 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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