Correlation Between Australian Unity and Superior Resources
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Superior Resources 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 Superior Resources 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 Superior Resources, you can compare the effects of market volatilities on Australian Unity and Superior Resources 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 Superior Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Superior Resources.
Diversification Opportunities for Australian Unity and Superior Resources
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and Superior is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Office and Superior Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Superior 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 Superior Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Superior Resources has no effect on the direction of Australian Unity i.e., Australian Unity and Superior Resources go up and down completely randomly.
Pair Corralation between Australian Unity and Superior Resources
Assuming the 90 days trading horizon Australian Unity Office is expected to under-perform the Superior Resources. But the stock apears to be less risky and, when comparing its historical volatility, Australian Unity Office is 6.31 times less risky than Superior Resources. The stock trades about -0.27 of its potential returns per unit of risk. The Superior Resources is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 0.60 in Superior Resources on September 13, 2024 and sell it today you would earn a total of 0.00 from holding Superior Resources 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. Superior Resources
Performance |
| Timeline |
| Australian Unity Office |
| Superior Resources |
Australian Unity and Superior Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Superior Resources
The main advantage of trading using opposite Australian Unity and Superior Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Superior Resources 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 Superior Resources will offset losses from the drop in Superior Resources' 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 |
| Superior Resources vs. Bailador Technology Invest | Superior Resources vs. Australian Unity Office | Superior Resources vs. Computershare | Superior Resources vs. Macquarie Technology Group |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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