Correlation Between Australian Agricultural and Super Retail
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Super Retail 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 Super Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Super Retail Group, you can compare the effects of market volatilities on Australian Agricultural and Super Retail 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 Super Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Super Retail.
Diversification Opportunities for Australian Agricultural and Super Retail
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Super is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Super Retail Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Super Retail 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 Super Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Super Retail Group has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Super Retail go up and down completely randomly.
Pair Corralation between Australian Agricultural and Super Retail
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Super Retail. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.29 times less risky than Super Retail. The stock trades about -0.11 of its potential returns per unit of risk. The Super Retail Group is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,454 in Super Retail Group on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Super Retail Group or generate 1.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Super Retail Group
Performance |
| Timeline |
| Australian Agricultural |
| Super Retail Group |
Australian Agricultural and Super Retail Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Super Retail
The main advantage of trading using opposite Australian Agricultural and Super Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Super Retail 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 Super Retail will offset losses from the drop in Super Retail'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 |
| Super Retail vs. Audio Pixels Holdings | Super Retail vs. Iodm | Super Retail vs. Nsx | Super Retail vs. TTG Fintech |
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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