Correlation Between Australian Dairy and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and Finexia Financial 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 Finexia Financial 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 Finexia Financial Group, you can compare the effects of market volatilities on Australian Dairy and Finexia Financial 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 Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and Finexia Financial.
Diversification Opportunities for Australian Dairy and Finexia Financial
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and Finexia is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Australian Dairy i.e., Australian Dairy and Finexia Financial go up and down completely randomly.
Pair Corralation between Australian Dairy and Finexia Financial
Assuming the 90 days trading horizon Australian Dairy Farms is expected to generate 1.55 times more return on investment than Finexia Financial. However, Australian Dairy is 1.55 times more volatile than Finexia Financial Group. It trades about 0.36 of its potential returns per unit of risk. Finexia Financial Group is currently generating about 0.26 per unit of risk. If you would invest 2.10 in Australian Dairy Farms on August 29, 2024 and sell it today you would earn a total of 0.90 from holding Australian Dairy Farms or generate 42.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Australian Dairy Farms vs. Finexia Financial Group
Performance |
| Timeline |
| Australian Dairy Farms |
| Finexia Financial |
Australian Dairy and Finexia Financial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and Finexia Financial
The main advantage of trading using opposite Australian Dairy and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.| Australian Dairy vs. PVW Resources | Australian Dairy vs. Woolworths | Australian Dairy vs. Wesfarmers | Australian Dairy vs. Coles Group |
| Finexia Financial vs. Champion Iron | Finexia Financial vs. Ridley | Finexia Financial vs. Peel Mining | Finexia Financial vs. Australian Dairy Farms |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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