Correlation Between Australian Unity and Bisalloy Steel
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Bisalloy Steel 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 Bisalloy Steel 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 Bisalloy Steel Group, you can compare the effects of market volatilities on Australian Unity and Bisalloy Steel 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 Bisalloy Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Bisalloy Steel.
Diversification Opportunities for Australian Unity and Bisalloy Steel
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and Bisalloy is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Bisalloy Steel Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bisalloy Steel Group 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 Bisalloy Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bisalloy Steel Group has no effect on the direction of Australian Unity i.e., Australian Unity and Bisalloy Steel go up and down completely randomly.
Pair Corralation between Australian Unity and Bisalloy Steel
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Bisalloy Steel. But the stock apears to be less risky and, when comparing its historical volatility, Australian Unity Office is 2.36 times less risky than Bisalloy Steel. The stock trades about -0.27 of its potential returns per unit of risk. The Bisalloy Steel Group is currently generating about 0.4 of returns per unit of risk over similar time horizon. If you would invest 345.00 in Bisalloy Steel Group on September 13, 2024 and sell it today you would earn a total of 93.00 from holding Bisalloy Steel Group or generate 26.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Bisalloy Steel Group
Performance |
| Timeline |
| Australian Unity Office |
| Bisalloy Steel Group |
Australian Unity and Bisalloy Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Bisalloy Steel
The main advantage of trading using opposite Australian Unity and Bisalloy Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Bisalloy Steel 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 Bisalloy Steel will offset losses from the drop in Bisalloy Steel's 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 |
| Bisalloy Steel vs. Sandon Capital Investments | Bisalloy Steel vs. Queste Communications | Bisalloy Steel vs. Premier Investments | Bisalloy Steel vs. Argo Investments |
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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