Correlation Between Ampol and Leeuwin Metals
Can any of the company-specific risk be diversified away by investing in both Ampol and Leeuwin 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 Ampol and Leeuwin Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampol and Leeuwin Metals, you can compare the effects of market volatilities on Ampol and Leeuwin 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 Ampol with a short position of Leeuwin Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampol and Leeuwin Metals.
Diversification Opportunities for Ampol and Leeuwin Metals
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Ampol and Leeuwin is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Ampol and Leeuwin Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Leeuwin Metals and Ampol 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 Ampol are associated (or correlated) with Leeuwin Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Leeuwin Metals has no effect on the direction of Ampol i.e., Ampol and Leeuwin Metals go up and down completely randomly.
Pair Corralation between Ampol and Leeuwin Metals
Assuming the 90 days trading horizon Ampol is expected to under-perform the Leeuwin Metals. But the stock apears to be less risky and, when comparing its historical volatility, Ampol is 2.82 times less risky than Leeuwin Metals. The stock trades about -0.09 of its potential returns per unit of risk. The Leeuwin Metals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Leeuwin Metals on September 5, 2024 and sell it today you would earn a total of 1.00 from holding Leeuwin Metals or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ampol vs. Leeuwin Metals
Performance |
| Timeline |
| Ampol |
| Leeuwin Metals |
Ampol and Leeuwin Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampol and Leeuwin Metals
The main advantage of trading using opposite Ampol and Leeuwin Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampol position performs unexpectedly, Leeuwin 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 Leeuwin Metals will offset losses from the drop in Leeuwin Metals' long position.| Ampol vs. Bluescope Steel | Ampol vs. Dug Technology | Ampol vs. Red Hill Iron | Ampol vs. Bisalloy Steel Group |
| Leeuwin Metals vs. Northern Star Resources | Leeuwin Metals vs. Evolution Mining | Leeuwin Metals vs. Bluescope Steel | Leeuwin Metals vs. Sandfire Resources NL |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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