Correlation Between Australian Unity and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Austchina Holdings 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 Unity and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Office and Austchina Holdings, you can compare the effects of market volatilities on Australian Unity and Austchina Holdings 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 Unity with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Austchina Holdings.
Diversification Opportunities for Australian Unity and Austchina Holdings
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Australian and Austchina is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Australian Unity 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 Unity Office are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Australian Unity i.e., Australian Unity and Austchina Holdings go up and down completely randomly.
Pair Corralation between Australian Unity and Austchina Holdings
If you would invest 0.20 in Austchina Holdings on September 13, 2024 and sell it today you would lose (0.10) from holding Austchina Holdings or give up 50.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Austchina Holdings
Performance |
| Timeline |
| Australian Unity Office |
| Austchina Holdings |
Australian Unity and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Austchina Holdings
The main advantage of trading using opposite Australian Unity and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Australian Unity vs. Scentre Group | Australian Unity vs. Vicinity Centres Re | Australian Unity vs. Charter Hall Retail | Australian Unity vs. Cromwell Property Group |
| Austchina Holdings vs. Home Consortium | Austchina Holdings vs. BKI Investment | Austchina Holdings vs. Flagship Investments | Austchina Holdings vs. A1 Investments Resources |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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