Correlation Between Australian Agricultural and AppHarvest
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and AppHarvest 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 Agricultural and AppHarvest into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and AppHarvest, you can compare the effects of market volatilities on Australian Agricultural and AppHarvest 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 Agricultural with a short position of AppHarvest. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and AppHarvest.
Diversification Opportunities for Australian Agricultural and AppHarvest
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and AppHarvest is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and AppHarvest in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AppHarvest and Australian Agricultural 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 Agricultural are associated (or correlated) with AppHarvest. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AppHarvest has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and AppHarvest go up and down completely randomly.
Pair Corralation between Australian Agricultural and AppHarvest
If you would invest 91.00 in Australian Agricultural on August 28, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.1% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 1.59% |
| Values | Daily Returns |
Australian Agricultural vs. AppHarvest
Performance |
| Timeline |
| Australian Agricultural |
| AppHarvest |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Australian Agricultural and AppHarvest Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and AppHarvest
The main advantage of trading using opposite Australian Agricultural and AppHarvest positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, AppHarvest 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 AppHarvest will offset losses from the drop in AppHarvest's long position.| Australian Agricultural vs. Avi Ltd ADR | Australian Agricultural vs. Altavoz Entertainment | Australian Agricultural vs. Aryzta AG PK | Australian Agricultural vs. Artisan Consumer Goods |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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