Correlation Between Australian Mines and ATT
Can any of the company-specific risk be diversified away by investing in both Australian Mines and ATT 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 Mines and ATT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Mines Limited and ATT Inc, you can compare the effects of market volatilities on Australian Mines and ATT 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 Mines with a short position of ATT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Mines and ATT.
Diversification Opportunities for Australian Mines and ATT
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and ATT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Australian Mines Limited and ATT Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATT Inc and Australian Mines 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 Mines Limited are associated (or correlated) with ATT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATT Inc has no effect on the direction of Australian Mines i.e., Australian Mines and ATT go up and down completely randomly.
Pair Corralation between Australian Mines and ATT
Assuming the 90 days horizon Australian Mines Limited is expected to generate 48.62 times more return on investment than ATT. However, Australian Mines is 48.62 times more volatile than ATT Inc. It trades about 0.1 of its potential returns per unit of risk. ATT Inc is currently generating about 0.05 per unit of risk. If you would invest 6.00 in Australian Mines Limited on September 3, 2024 and sell it today you would lose (5.09) from holding Australian Mines Limited or give up 84.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 69.29% |
| Values | Daily Returns |
Australian Mines Limited vs. ATT Inc
Performance |
| Timeline |
| Australian Mines |
| ATT Inc |
Australian Mines and ATT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Mines and ATT
The main advantage of trading using opposite Australian Mines and ATT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Mines position performs unexpectedly, ATT 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 ATT will offset losses from the drop in ATT's long position.| Australian Mines vs. Qubec Nickel Corp | Australian Mines vs. IGO Limited | Australian Mines vs. Avarone Metals | Australian Mines vs. Adriatic Metals PLC |
| ATT vs. Highway Holdings Limited | ATT vs. QCR Holdings | ATT vs. Partner Communications | ATT vs. Acumen Pharmaceuticals |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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