Correlation Between Australian Unity and G8 Education
Can any of the company-specific risk be diversified away by investing in both Australian Unity and G8 Education 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 G8 Education 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 G8 Education, you can compare the effects of market volatilities on Australian Unity and G8 Education 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 G8 Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and G8 Education.
Diversification Opportunities for Australian Unity and G8 Education
-0.16 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and GEM is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and G8 Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on G8 Education 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 G8 Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of G8 Education has no effect on the direction of Australian Unity i.e., Australian Unity and G8 Education go up and down completely randomly.
Pair Corralation between Australian Unity and G8 Education
Assuming the 90 days trading horizon Australian Unity is expected to generate 87.27 times less return on investment than G8 Education. In addition to that, Australian Unity is 1.17 times more volatile than G8 Education. It trades about 0.0 of its total potential returns per unit of risk. G8 Education is currently generating about 0.05 per unit of volatility. If you would invest 92.00 in G8 Education on August 30, 2024 and sell it today you would earn a total of 44.00 from holding G8 Education or generate 47.83% 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. G8 Education
Performance |
| Timeline |
| Australian Unity Office |
| G8 Education |
Australian Unity and G8 Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and G8 Education
The main advantage of trading using opposite Australian Unity and G8 Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, G8 Education 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 G8 Education will offset losses from the drop in G8 Education's long position.| Australian Unity vs. Charter Hall Retail | Australian Unity vs. Ecofibre | Australian Unity vs. iShares Global Healthcare | Australian Unity vs. Adriatic Metals Plc |
| G8 Education vs. Prodigy Gold NL | G8 Education vs. Enegex NL | G8 Education vs. Invex Therapeutics | G8 Education vs. Pointsbet Holdings |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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