Correlation Between Australian Unity and K2 Asset
Can any of the company-specific risk be diversified away by investing in both Australian Unity and K2 Asset 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 K2 Asset 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 K2 Asset Management, you can compare the effects of market volatilities on Australian Unity and K2 Asset 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 K2 Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and K2 Asset.
Diversification Opportunities for Australian Unity and K2 Asset
-0.8 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Australian and KAM is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and K2 Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on K2 Asset Management 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 K2 Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of K2 Asset Management has no effect on the direction of Australian Unity i.e., Australian Unity and K2 Asset go up and down completely randomly.
Pair Corralation between Australian Unity and K2 Asset
Assuming the 90 days trading horizon Australian Unity Office is expected to generate 0.47 times more return on investment than K2 Asset. However, Australian Unity Office is 2.15 times less risky than K2 Asset. It trades about 0.09 of its potential returns per unit of risk. K2 Asset Management is currently generating about -0.23 per unit of risk. If you would invest 109.00 in Australian Unity Office on October 21, 2024 and sell it today you would earn a total of 1.00 from holding Australian Unity Office or generate 0.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. K2 Asset Management
Performance |
| Timeline |
| Australian Unity Office |
| K2 Asset Management |
Australian Unity and K2 Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and K2 Asset
The main advantage of trading using opposite Australian Unity and K2 Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, K2 Asset 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 K2 Asset will offset losses from the drop in K2 Asset's long position.| Australian Unity vs. Macquarie Bank Limited | Australian Unity vs. Dexus Convenience Retail | Australian Unity vs. Autosports Group | Australian Unity vs. Charter Hall Retail |
| K2 Asset vs. ABACUS STORAGE KING | K2 Asset vs. AiMedia Technologies | K2 Asset vs. Sky Metals | K2 Asset vs. Southern Cross Media |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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