Correlation Between Australian Agricultural and Optimi Health
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Optimi Health 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 Optimi Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Optimi Health Corp, you can compare the effects of market volatilities on Australian Agricultural and Optimi Health 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 Optimi Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Optimi Health.
Diversification Opportunities for Australian Agricultural and Optimi Health
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Optimi is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Optimi Health Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optimi Health Corp 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 Optimi Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optimi Health Corp has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Optimi Health go up and down completely randomly.
Pair Corralation between Australian Agricultural and Optimi Health
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.34 times more return on investment than Optimi Health. However, Australian Agricultural is 2.93 times less risky than Optimi Health. It trades about 0.02 of its potential returns per unit of risk. Optimi Health Corp is currently generating about -0.03 per unit of risk. If you would invest 88.00 in Australian Agricultural on September 3, 2024 and sell it today you would earn a total of 3.00 from holding Australian Agricultural or generate 3.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Optimi Health Corp
Performance |
| Timeline |
| Australian Agricultural |
| Optimi Health Corp |
Australian Agricultural and Optimi Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Optimi Health
The main advantage of trading using opposite Australian Agricultural and Optimi Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Optimi Health 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 Optimi Health will offset losses from the drop in Optimi Health's long position.| Australian Agricultural vs. GrainCorp Limited | Australian Agricultural vs. Forafric Global PLC | Australian Agricultural vs. Forafric Global PLC | Australian Agricultural vs. Limoneira Co |
| Optimi Health vs. Forafric Global PLC | Optimi Health vs. Forafric Global PLC | Optimi Health vs. GrainCorp Limited | Optimi Health vs. Australian Agricultural |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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