Correlation Between Aussie Broadband and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Austchina Holdings 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 Aussie Broadband and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Austchina Holdings, you can compare the effects of market volatilities on Aussie Broadband and Austchina Holdings 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 Aussie Broadband with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Austchina Holdings.
Diversification Opportunities for Aussie Broadband and Austchina Holdings
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Aussie and Austchina is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Austchina Holdings go up and down completely randomly.
Pair Corralation between Aussie Broadband and Austchina Holdings
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 13.98 times less return on investment than Austchina Holdings. But when comparing it to its historical volatility, Aussie Broadband is 13.44 times less risky than Austchina Holdings. It trades about 0.09 of its potential returns per unit of risk. Austchina Holdings is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 0.10 in Austchina Holdings on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Austchina Holdings or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aussie Broadband vs. Austchina Holdings
Performance |
| Timeline |
| Aussie Broadband |
| Austchina Holdings |
Aussie Broadband and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and Austchina Holdings
The main advantage of trading using opposite Aussie Broadband and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. Westpac Banking | Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. Commonwealth Bank of |
| Austchina Holdings vs. Nine Entertainment Co | Austchina Holdings vs. Kingsrose Mining | Austchina Holdings vs. Aussie Broadband | Austchina Holdings vs. Seven West Media |
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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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