Correlation Between Australian Dairy and Platinum Asia
Can any of the company-specific risk be diversified away by investing in both Australian Dairy and Platinum Asia 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 Platinum Asia 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 Platinum Asia Investments, you can compare the effects of market volatilities on Australian Dairy and Platinum Asia 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 Platinum Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Dairy and Platinum Asia.
Diversification Opportunities for Australian Dairy and Platinum Asia
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Platinum is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Australian Dairy Farms and Platinum Asia Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum Asia Investments 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 Platinum Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asia Investments has no effect on the direction of Australian Dairy i.e., Australian Dairy and Platinum Asia go up and down completely randomly.
Pair Corralation between Australian Dairy and Platinum Asia
Assuming the 90 days trading horizon Australian Dairy Farms is expected to generate 3.91 times more return on investment than Platinum Asia. However, Australian Dairy is 3.91 times more volatile than Platinum Asia Investments. It trades about 0.37 of its potential returns per unit of risk. Platinum Asia Investments is currently generating about -0.26 per unit of risk. If you would invest 1.90 in Australian Dairy Farms on August 25, 2024 and sell it today you would earn a total of 0.90 from holding Australian Dairy Farms or generate 47.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Australian Dairy Farms vs. Platinum Asia Investments
Performance |
| Timeline |
| Australian Dairy Farms |
| Platinum Asia Investments |
Australian Dairy and Platinum Asia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Dairy and Platinum Asia
The main advantage of trading using opposite Australian Dairy and Platinum Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Dairy position performs unexpectedly, Platinum Asia 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 Platinum Asia will offset losses from the drop in Platinum Asia's long position.| Australian Dairy vs. BTC Health Limited | Australian Dairy vs. Health and Plant | Australian Dairy vs. Queste Communications | Australian Dairy vs. EVE Health Group |
| Platinum Asia vs. Garda Diversified Ppty | Platinum Asia vs. Computershare | Platinum Asia vs. MFF Capital Investments | Platinum Asia vs. Alto Metals |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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