Correlation Between Australian Agricultural and Hutchison Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Hutchison Telecommunicatio 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 Hutchison Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Hutchison Telecommunications, you can compare the effects of market volatilities on Australian Agricultural and Hutchison Telecommunicatio 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 Hutchison Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Hutchison Telecommunicatio.
Diversification Opportunities for Australian Agricultural and Hutchison Telecommunicatio
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Hutchison is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Hutchison Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hutchison Telecommunicatio 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 Hutchison Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hutchison Telecommunicatio has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Hutchison Telecommunicatio go up and down completely randomly.
Pair Corralation between Australian Agricultural and Hutchison Telecommunicatio
Assuming the 90 days trading horizon Australian Agricultural is expected to generate 0.28 times more return on investment than Hutchison Telecommunicatio. However, Australian Agricultural is 3.61 times less risky than Hutchison Telecommunicatio. It trades about -0.09 of its potential returns per unit of risk. Hutchison Telecommunications is currently generating about -0.11 per unit of risk. If you would invest 140.00 in Australian Agricultural on August 28, 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 Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Hutchison Telecommunications
Performance |
| Timeline |
| Australian Agricultural |
| Hutchison Telecommunicatio |
Australian Agricultural and Hutchison Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Hutchison Telecommunicatio
The main advantage of trading using opposite Australian Agricultural and Hutchison Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Hutchison Telecommunicatio 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 Hutchison Telecommunicatio will offset losses from the drop in Hutchison Telecommunicatio's long position.| Australian Agricultural vs. Macquarie Technology Group | Australian Agricultural vs. Fisher Paykel Healthcare | Australian Agricultural vs. Autosports Group | Australian Agricultural vs. Nufarm Finance NZ |
| Hutchison Telecommunicatio vs. Macquarie Group | Hutchison Telecommunicatio vs. CSL | Hutchison Telecommunicatio vs. Commonwealth Bank of | Hutchison Telecommunicatio vs. Commonwealth Bank of |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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