Correlation Between Australian Unity and Jupiter Energy
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Jupiter Energy 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 Jupiter Energy 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 Jupiter Energy, you can compare the effects of market volatilities on Australian Unity and Jupiter Energy 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 Jupiter Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Jupiter Energy.
Diversification Opportunities for Australian Unity and Jupiter Energy
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Jupiter is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Jupiter Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jupiter Energy 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 Jupiter Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jupiter Energy has no effect on the direction of Australian Unity i.e., Australian Unity and Jupiter Energy go up and down completely randomly.
Pair Corralation between Australian Unity and Jupiter Energy
Assuming the 90 days trading horizon Australian Unity is expected to generate 4.82 times less return on investment than Jupiter Energy. But when comparing it to its historical volatility, Australian Unity Office is 4.36 times less risky than Jupiter Energy. It trades about 0.06 of its potential returns per unit of risk. Jupiter Energy is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 1.90 in Jupiter Energy on September 1, 2024 and sell it today you would earn a total of 1.20 from holding Jupiter Energy or generate 63.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Jupiter Energy
Performance |
| Timeline |
| Australian Unity Office |
| Jupiter Energy |
Australian Unity and Jupiter Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Jupiter Energy
The main advantage of trading using opposite Australian Unity and Jupiter Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Jupiter Energy 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 Jupiter Energy will offset losses from the drop in Jupiter Energy'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 |
| Jupiter Energy vs. Australian Agricultural | Jupiter Energy vs. Queste Communications | Jupiter Energy vs. Pinnacle Investment Management | Jupiter Energy vs. A1 Investments Resources |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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