Correlation Between Australian Unity and Gold Road
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Gold Road 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 Gold Road 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 Gold Road Resources, you can compare the effects of market volatilities on Australian Unity and Gold Road 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 Gold Road. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Gold Road.
Diversification Opportunities for Australian Unity and Gold Road
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Australian and Gold is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Gold Road Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gold Road Resources 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 Gold Road. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gold Road Resources has no effect on the direction of Australian Unity i.e., Australian Unity and Gold Road go up and down completely randomly.
Pair Corralation between Australian Unity and Gold Road
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Gold Road. But the stock apears to be less risky and, when comparing its historical volatility, Australian Unity Office is 2.21 times less risky than Gold Road. The stock trades about -0.27 of its potential returns per unit of risk. The Gold Road Resources is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 177.00 in Gold Road Resources on September 13, 2024 and sell it today you would earn a total of 38.00 from holding Gold Road Resources or generate 21.47% 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. Gold Road Resources
Performance |
| Timeline |
| Australian Unity Office |
| Gold Road Resources |
Australian Unity and Gold Road Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Gold Road
The main advantage of trading using opposite Australian Unity and Gold Road positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Gold Road 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 Gold Road will offset losses from the drop in Gold Road'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 |
| Gold Road vs. Ras Technology Holdings | Gold Road vs. Srj Technologies Group | Gold Road vs. Richmond Vanadium Technology | Gold Road vs. G8 Education |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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