Correlation Between Aristocrat Leisure and Althea Group
Can any of the company-specific risk be diversified away by investing in both Aristocrat Leisure and Althea Group 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 Aristocrat Leisure and Althea Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aristocrat Leisure and Althea Group Holdings, you can compare the effects of market volatilities on Aristocrat Leisure and Althea Group 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 Aristocrat Leisure with a short position of Althea Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aristocrat Leisure and Althea Group.
Diversification Opportunities for Aristocrat Leisure and Althea Group
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Aristocrat and Althea is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Aristocrat Leisure and Althea Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Althea Group Holdings and Aristocrat Leisure 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 Aristocrat Leisure are associated (or correlated) with Althea Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Althea Group Holdings has no effect on the direction of Aristocrat Leisure i.e., Aristocrat Leisure and Althea Group go up and down completely randomly.
Pair Corralation between Aristocrat Leisure and Althea Group
Assuming the 90 days trading horizon Aristocrat Leisure is expected to generate 0.43 times more return on investment than Althea Group. However, Aristocrat Leisure is 2.32 times less risky than Althea Group. It trades about 0.14 of its potential returns per unit of risk. Althea Group Holdings is currently generating about -0.38 per unit of risk. If you would invest 6,520 in Aristocrat Leisure on September 12, 2024 and sell it today you would earn a total of 270.00 from holding Aristocrat Leisure or generate 4.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aristocrat Leisure vs. Althea Group Holdings
Performance |
| Timeline |
| Aristocrat Leisure |
| Althea Group Holdings |
Aristocrat Leisure and Althea Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aristocrat Leisure and Althea Group
The main advantage of trading using opposite Aristocrat Leisure and Althea Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aristocrat Leisure position performs unexpectedly, Althea Group 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 Althea Group will offset losses from the drop in Althea Group's long position.| Aristocrat Leisure vs. Aneka Tambang Tbk | Aristocrat Leisure vs. BHP Group Limited | Aristocrat Leisure vs. Commonwealth Bank | Aristocrat Leisure vs. Commonwealth Bank of |
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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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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