Correlation Between Australian Agricultural and Pact Group
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Pact Group 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 Pact Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Pact Group Holdings, you can compare the effects of market volatilities on Australian Agricultural and Pact Group 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 Pact Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Pact Group.
Diversification Opportunities for Australian Agricultural and Pact Group
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Pact is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Pact Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pact Group Holdings 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 Pact Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pact Group Holdings has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Pact Group go up and down completely randomly.
Pair Corralation between Australian Agricultural and Pact Group
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Pact Group. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.48 times less risky than Pact Group. The stock trades about -0.01 of its potential returns per unit of risk. The Pact Group Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 127.00 in Pact Group Holdings on November 19, 2024 and sell it today you would lose (24.00) from holding Pact Group Holdings or give up 18.9% 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. Pact Group Holdings
Performance |
| Timeline |
| Australian Agricultural |
| Pact Group Holdings |
Australian Agricultural and Pact Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Pact Group
The main advantage of trading using opposite Australian Agricultural and Pact Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Pact Group 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 Pact Group will offset losses from the drop in Pact Group's long position.| Australian Agricultural vs. Red Hill Iron | Australian Agricultural vs. Beam Communications Holdings | Australian Agricultural vs. Catalyst Metals | Australian Agricultural vs. Aeris Environmental |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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