Correlation Between Austco Healthcare and Telstra

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Can any of the company-specific risk be diversified away by investing in both Austco Healthcare and Telstra 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 Telstra into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Austco Healthcare and Telstra, you can compare the effects of market volatilities on Austco Healthcare and Telstra 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 Telstra. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austco Healthcare and Telstra.

Diversification Opportunities for Austco Healthcare and Telstra

AustcoTelstraDiversified AwayAustcoTelstraDiversified Away100%
0.13
  Correlation Coefficient

Average diversification

The 3 months correlation between Austco and Telstra is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Austco Healthcare and Telstra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telstra 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 Telstra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telstra has no effect on the direction of Austco Healthcare i.e., Austco Healthcare and Telstra go up and down completely randomly.

Pair Corralation between Austco Healthcare and Telstra

Assuming the 90 days trading horizon Austco Healthcare is expected to generate 5.7 times more return on investment than Telstra. However, Austco Healthcare is 5.7 times more volatile than Telstra. It trades about 0.11 of its potential returns per unit of risk. Telstra is currently generating about -0.24 per unit of risk. If you would invest  31.00  in Austco Healthcare on November 21, 2024 and sell it today you would earn a total of  2.00  from holding Austco Healthcare or generate 6.45% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Austco Healthcare  vs.  Telstra

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510152025
JavaScript chart by amCharts 3.21.15AHC TLS
       Timeline  
Austco Healthcare 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Austco Healthcare are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Austco Healthcare unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.240.260.280.30.320.34
Telstra 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Telstra are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Telstra is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb3.853.93.9544.05

Austco Healthcare and Telstra Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.33-6.24-4.15-2.060.02.184.436.688.9311.18 0.20.40.60.8
JavaScript chart by amCharts 3.21.15AHC TLS
       Returns  

Pair Trading with Austco Healthcare and Telstra

The main advantage of trading using opposite Austco Healthcare and Telstra positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austco Healthcare position performs unexpectedly, Telstra 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 Telstra will offset losses from the drop in Telstra's long position.
The idea behind Austco Healthcare and Telstra pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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