Correlation Between Advanced Braking and Transurban
Can any of the company-specific risk be diversified away by investing in both Advanced Braking and Transurban 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 Advanced Braking and Transurban into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Advanced Braking Technology and Transurban Group, you can compare the effects of market volatilities on Advanced Braking and Transurban 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 Advanced Braking with a short position of Transurban. Check out your portfolio center. Please also check ongoing floating volatility patterns of Advanced Braking and Transurban.
Diversification Opportunities for Advanced Braking and Transurban
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Advanced and Transurban is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Braking Technology and Transurban Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transurban Group and Advanced Braking 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 Advanced Braking Technology are associated (or correlated) with Transurban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transurban Group has no effect on the direction of Advanced Braking i.e., Advanced Braking and Transurban go up and down completely randomly.
Pair Corralation between Advanced Braking and Transurban
Assuming the 90 days trading horizon Advanced Braking Technology is expected to under-perform the Transurban. In addition to that, Advanced Braking is 2.47 times more volatile than Transurban Group. It trades about -0.06 of its total potential returns per unit of risk. Transurban Group is currently generating about 0.28 per unit of volatility. If you would invest 1,226 in Transurban Group on October 22, 2024 and sell it today you would earn a total of 154.00 from holding Transurban Group or generate 12.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Advanced Braking Technology vs. Transurban Group
Performance |
| Timeline |
| Advanced Braking Tec |
| Transurban Group |
Advanced Braking and Transurban Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Advanced Braking and Transurban
The main advantage of trading using opposite Advanced Braking and Transurban positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Braking position performs unexpectedly, Transurban 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 Transurban will offset losses from the drop in Transurban's long position.| Advanced Braking vs. Energy Resources | Advanced Braking vs. A1 Investments Resources | Advanced Braking vs. Hutchison Telecommunications | Advanced Braking vs. Tigers Realm Coal |
| Transurban vs. Hotel Property Investments | Transurban vs. Cosmo Metals | Transurban vs. Medical Developments International | Transurban vs. Air New Zealand |
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 Positions Ratings module to 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.
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