Correlation Between Austral Gold and Australian Dairy
Can any of the company-specific risk be diversified away by investing in both Austral Gold and Australian Dairy 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 Austral Gold and Australian Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austral Gold and Australian Dairy Farms, you can compare the effects of market volatilities on Austral Gold and Australian Dairy 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 Austral Gold with a short position of Australian Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and Australian Dairy.
Diversification Opportunities for Austral Gold and Australian Dairy
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Austral and Australian is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold and Australian Dairy Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Dairy Farms and Austral Gold 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 Austral Gold are associated (or correlated) with Australian Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Dairy Farms has no effect on the direction of Austral Gold i.e., Austral Gold and Australian Dairy go up and down completely randomly.
Pair Corralation between Austral Gold and Australian Dairy
Assuming the 90 days trading horizon Austral Gold is expected to under-perform the Australian Dairy. In addition to that, Austral Gold is 1.78 times more volatile than Australian Dairy Farms. It trades about -0.03 of its total potential returns per unit of risk. Australian Dairy Farms is currently generating about 0.44 per unit of volatility. If you would invest 2.00 in Australian Dairy Farms on August 31, 2024 and sell it today you would earn a total of 1.10 from holding Australian Dairy Farms or generate 55.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Austral Gold vs. Australian Dairy Farms
Performance |
| Timeline |
| Austral Gold |
| Australian Dairy Farms |
Austral Gold and Australian Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austral Gold and Australian Dairy
The main advantage of trading using opposite Austral Gold and Australian Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, Australian Dairy 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 Australian Dairy will offset losses from the drop in Australian Dairy's long position.| Austral Gold vs. BTC Health Limited | Austral Gold vs. Super Retail Group | Austral Gold vs. My Foodie Box | Austral Gold vs. Oceania Healthcare |
| Australian Dairy vs. Hutchison Telecommunications | Australian Dairy vs. Infomedia | Australian Dairy vs. Black Rock Mining | Australian Dairy vs. Skycity Entertainment Group |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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