Correlation Between American Clean and Austral Gold
Can any of the company-specific risk be diversified away by investing in both American Clean and Austral Gold 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 American Clean and Austral Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Clean Resources and Austral Gold Limited, you can compare the effects of market volatilities on American Clean and Austral Gold 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 American Clean with a short position of Austral Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Clean and Austral Gold.
Diversification Opportunities for American Clean and Austral Gold
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between American and Austral is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding American Clean Resources and Austral Gold Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austral Gold Limited and American Clean 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 American Clean Resources are associated (or correlated) with Austral Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austral Gold Limited has no effect on the direction of American Clean i.e., American Clean and Austral Gold go up and down completely randomly.
Pair Corralation between American Clean and Austral Gold
Given the investment horizon of 90 days American Clean is expected to generate 6.11 times less return on investment than Austral Gold. But when comparing it to its historical volatility, American Clean Resources is 3.36 times less risky than Austral Gold. It trades about 0.06 of its potential returns per unit of risk. Austral Gold Limited is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 2.52 in Austral Gold Limited on August 31, 2024 and sell it today you would lose (0.46) from holding Austral Gold Limited or give up 18.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Clean Resources vs. Austral Gold Limited
Performance |
| Timeline |
| American Clean Resources |
| Austral Gold Limited |
American Clean and Austral Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Clean and Austral Gold
The main advantage of trading using opposite American Clean and Austral Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Clean position performs unexpectedly, Austral Gold 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 Austral Gold will offset losses from the drop in Austral Gold's long position.| American Clean vs. Scottie Resources Corp | American Clean vs. Defiance Silver Corp | American Clean vs. HUMANA INC | American Clean vs. SCOR PK |
| Austral Gold vs. Scottie Resources Corp | Austral Gold vs. Defiance Silver Corp | Austral Gold vs. HUMANA INC | Austral Gold vs. SCOR PK |
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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