Correlation Between Australian Unity and Capricorn Metals
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Capricorn 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 Australian Unity and Capricorn Metals 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 Capricorn Metals, you can compare the effects of market volatilities on Australian Unity and Capricorn 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 Australian Unity with a short position of Capricorn Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Capricorn Metals.
Diversification Opportunities for Australian Unity and Capricorn Metals
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Capricorn is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Capricorn Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Capricorn Metals 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 Capricorn Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Capricorn Metals has no effect on the direction of Australian Unity i.e., Australian Unity and Capricorn Metals go up and down completely randomly.
Pair Corralation between Australian Unity and Capricorn Metals
Assuming the 90 days trading horizon Australian Unity is expected to generate 22.0 times less return on investment than Capricorn Metals. But when comparing it to its historical volatility, Australian Unity Office is 2.16 times less risky than Capricorn Metals. It trades about 0.07 of its potential returns per unit of risk. Capricorn Metals is currently generating about 0.74 of returns per unit of risk over similar time horizon. If you would invest 628.00 in Capricorn Metals on November 3, 2024 and sell it today you would earn a total of 144.00 from holding Capricorn Metals or generate 22.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Capricorn Metals
Performance |
| Timeline |
| Australian Unity Office |
| Capricorn Metals |
Australian Unity and Capricorn Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Capricorn Metals
The main advantage of trading using opposite Australian Unity and Capricorn Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Capricorn 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 Capricorn Metals will offset losses from the drop in Capricorn Metals' long position.| Australian Unity vs. Bank of Queensland | Australian Unity vs. BSP Financial Group | Australian Unity vs. COG Financial Services | Australian Unity vs. Dalaroo Metals |
| Capricorn Metals vs. Clime Investment Management | Capricorn Metals vs. Pinnacle Investment Management | Capricorn Metals vs. A1 Investments Resources | Capricorn Metals vs. MFF Capital 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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