Correlation Between Austco Healthcare and National Australia
Can any of the company-specific risk be diversified away by investing in both Austco Healthcare and National Australia 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 Austco Healthcare and National Australia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austco Healthcare and National Australia Bank, you can compare the effects of market volatilities on Austco Healthcare and National Australia 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 Austco Healthcare with a short position of National Australia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austco Healthcare and National Australia.
Diversification Opportunities for Austco Healthcare and National Australia
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Austco and National is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Austco Healthcare and National Australia Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Australia Bank and Austco Healthcare 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 Austco Healthcare are associated (or correlated) with National Australia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Australia Bank has no effect on the direction of Austco Healthcare i.e., Austco Healthcare and National Australia go up and down completely randomly.
Pair Corralation between Austco Healthcare and National Australia
Assuming the 90 days trading horizon Austco Healthcare is expected to generate 8.99 times more return on investment than National Australia. However, Austco Healthcare is 8.99 times more volatile than National Australia Bank. It trades about 0.07 of its potential returns per unit of risk. National Australia Bank is currently generating about 0.07 per unit of risk. If you would invest 13.00 in Austco Healthcare on November 27, 2024 and sell it today you would earn a total of 20.00 from holding Austco Healthcare or generate 153.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Austco Healthcare vs. National Australia Bank
Performance |
| Timeline |
| Austco Healthcare |
| National Australia Bank |
Austco Healthcare and National Australia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Austco Healthcare and National Australia
The main advantage of trading using opposite Austco Healthcare and National Australia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austco Healthcare position performs unexpectedly, National Australia 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 National Australia will offset losses from the drop in National Australia's long position.| Austco Healthcare vs. Steamships Trading | Austco Healthcare vs. Flagship Investments | Austco Healthcare vs. Retail Food Group | Austco Healthcare vs. Charter Hall Retail |
| National Australia vs. Bluescope Steel | National Australia vs. Bisalloy Steel Group | National Australia vs. Pearl Gull Iron | National Australia vs. Hutchison Telecommunications |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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