Correlation Between Australian Unity and Global Health
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Global Health 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 Global Health 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 Global Health, you can compare the effects of market volatilities on Australian Unity and Global Health 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 Global Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Global Health.
Diversification Opportunities for Australian Unity and Global Health
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and Global is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Global Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Health 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 Global Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Health has no effect on the direction of Australian Unity i.e., Australian Unity and Global Health go up and down completely randomly.
Pair Corralation between Australian Unity and Global Health
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Global Health. But the stock apears to be less risky and, when comparing its historical volatility, Australian Unity Office is 2.73 times less risky than Global Health. The stock trades about -0.24 of its potential returns per unit of risk. The Global Health is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 14.00 in Global Health on September 14, 2024 and sell it today you would earn a total of 0.00 from holding Global Health or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Global Health
Performance |
| Timeline |
| Australian Unity Office |
| Global Health |
Australian Unity and Global Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Global Health
The main advantage of trading using opposite Australian Unity and Global Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Global Health 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 Global Health will offset losses from the drop in Global Health's long position.| Australian Unity vs. Advanced Braking Technology | Australian Unity vs. Stelar Metals | Australian Unity vs. Bio Gene Technology | Australian Unity vs. GreenX Metals |
| Global Health vs. PVW Resources | Global Health vs. Woolworths | Global Health vs. Wesfarmers | Global Health vs. Ramsay Health Care |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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