Correlation Between Australian Unity and Globe Metals
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Globe 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 Globe 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 Globe Metals Mining, you can compare the effects of market volatilities on Australian Unity and Globe 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 Globe Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Globe Metals.
Diversification Opportunities for Australian Unity and Globe Metals
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Globe is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Globe Metals Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Globe Metals Mining 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 Globe Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Globe Metals Mining has no effect on the direction of Australian Unity i.e., Australian Unity and Globe Metals go up and down completely randomly.
Pair Corralation between Australian Unity and Globe Metals
Assuming the 90 days trading horizon Australian Unity Office is expected to generate 0.1 times more return on investment than Globe Metals. However, Australian Unity Office is 10.0 times less risky than Globe Metals. It trades about 0.39 of its potential returns per unit of risk. Globe Metals Mining is currently generating about -0.03 per unit of risk. If you would invest 105.00 in Australian Unity Office on October 10, 2024 and sell it today you would earn a total of 4.00 from holding Australian Unity Office or generate 3.81% 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. Globe Metals Mining
Performance |
| Timeline |
| Australian Unity Office |
| Globe Metals Mining |
Australian Unity and Globe Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Globe Metals
The main advantage of trading using opposite Australian Unity and Globe Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Globe 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 Globe Metals will offset losses from the drop in Globe Metals' long position.| Australian Unity vs. Mount Gibson Iron | Australian Unity vs. Vulcan Steel | Australian Unity vs. Macquarie Bank Limited | Australian Unity vs. Kkr Credit Income |
| Globe Metals vs. ARN Media Limited | Globe Metals vs. Southern Cross Media | Globe Metals vs. Mach7 Technologies | Globe Metals vs. Dug Technology |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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