Correlation Between Australian Unity and Platinum Asset
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Platinum 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 Platinum 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 Platinum Asset Management, you can compare the effects of market volatilities on Australian Unity and Platinum 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 Platinum Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Platinum Asset.
Diversification Opportunities for Australian Unity and Platinum Asset
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Australian and Platinum is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Platinum Asset Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Platinum 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 Platinum Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Platinum Asset Management has no effect on the direction of Australian Unity i.e., Australian Unity and Platinum Asset go up and down completely randomly.
Pair Corralation between Australian Unity and Platinum Asset
Assuming the 90 days trading horizon Australian Unity is expected to generate 8.45 times less return on investment than Platinum Asset. But when comparing it to its historical volatility, Australian Unity Office is 3.86 times less risky than Platinum Asset. It trades about 0.09 of its potential returns per unit of risk. Platinum Asset Management is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 64.00 in Platinum Asset Management on October 21, 2024 and sell it today you would earn a total of 5.00 from holding Platinum Asset Management or generate 7.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Office vs. Platinum Asset Management
Performance |
| Timeline |
| Australian Unity Office |
| Platinum Asset Management |
Australian Unity and Platinum Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Platinum Asset
The main advantage of trading using opposite Australian Unity and Platinum Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Platinum 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 Platinum Asset will offset losses from the drop in Platinum 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 |
| Platinum Asset vs. Ramsay Health Care | Platinum Asset vs. Epsilon Healthcare | Platinum Asset vs. Austco Healthcare | Platinum Asset vs. Peel Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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