Correlation Between Australian Dairy and Cooper Metals
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and Cooper Metals 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 Australian Dairy and Cooper Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Dairy Farms and Cooper Metals, you can compare the effects of market volatilities on Australian Dairy and Cooper Metals 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 Australian Dairy with a short position of Cooper Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and Cooper Metals.
Diversification Opportunities for Australian Dairy and Cooper Metals
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Australian and Cooper is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and Cooper Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cooper Metals and Australian Dairy 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 Australian Dairy Farms are associated (or correlated) with Cooper Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cooper Metals has no effect on the direction of Australian Dairy i.e., Australian Dairy and Cooper Metals go up and down completely randomly.
Pair Corralation between Australian Dairy and Cooper Metals
Assuming the 90 days trading horizon Australian Dairy Farms is expected to generate 0.76 times more return on investment than Cooper Metals. However, Australian Dairy Farms is 1.32 times less risky than Cooper Metals. It trades about 0.02 of its potential returns per unit of risk. Cooper Metals is currently generating about -0.01 per unit of risk. If you would invest 5.00 in Australian Dairy Farms on September 3, 2024 and sell it today you would lose (1.20) from holding Australian Dairy Farms or give up 24.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Dairy Farms vs. Cooper Metals
Performance |
| Timeline |
| Australian Dairy Farms |
| Cooper Metals |
Australian Dairy and Cooper Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and Cooper Metals
The main advantage of trading using opposite Australian Dairy and Cooper Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, Cooper Metals 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 Cooper Metals will offset losses from the drop in Cooper Metals' long position.| Australian Dairy vs. Cooper Metals | Australian Dairy vs. OD6 Metals | Australian Dairy vs. SportsHero | Australian Dairy vs. Champion Iron |
| Cooper Metals vs. Richmond Vanadium Technology | Cooper Metals vs. Metro Mining | Cooper Metals vs. Ras Technology Holdings | Cooper Metals vs. Dug Technology |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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