Correlation Between Aussie Broadband and Hammer Metals
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Hammer Metals 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 Hammer Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Hammer Metals, you can compare the effects of market volatilities on Aussie Broadband and Hammer Metals 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 Hammer Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Hammer Metals.
Diversification Opportunities for Aussie Broadband and Hammer Metals
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Aussie and Hammer is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Hammer Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammer Metals 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 Hammer Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammer Metals has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Hammer Metals go up and down completely randomly.
Pair Corralation between Aussie Broadband and Hammer Metals
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 0.16 times more return on investment than Hammer Metals. However, Aussie Broadband is 6.07 times less risky than Hammer Metals. It trades about -0.16 of its potential returns per unit of risk. Hammer Metals is currently generating about -0.05 per unit of risk. If you would invest 367.00 in Aussie Broadband on October 12, 2024 and sell it today you would lose (9.00) from holding Aussie Broadband or give up 2.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
Aussie Broadband vs. Hammer Metals
Performance |
| Timeline |
| Aussie Broadband |
| Hammer Metals |
Aussie Broadband and Hammer Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and Hammer Metals
The main advantage of trading using opposite Aussie Broadband and Hammer Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, Hammer Metals 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 Hammer Metals will offset losses from the drop in Hammer Metals' long position.| Aussie Broadband vs. Global Health | Aussie Broadband vs. Home Consortium | Aussie Broadband vs. Oceania Healthcare | Aussie Broadband vs. Autosports Group |
| Hammer Metals vs. Sandon Capital Investments | Hammer Metals vs. Diversified United Investment | Hammer Metals vs. Carnegie Clean Energy | Hammer Metals vs. Technology One |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance |