Correlation Between Autosports and Summit Resources
Can any of the company-specific risk be diversified away by investing in both Autosports and Summit 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 Autosports and Summit Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Autosports Group and Summit Resources Limited, you can compare the effects of market volatilities on Autosports and Summit 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 Autosports with a short position of Summit Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Autosports and Summit Resources.
Diversification Opportunities for Autosports and Summit Resources
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Autosports and Summit is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Autosports Group and Summit Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Summit Resources and Autosports 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 Autosports Group are associated (or correlated) with Summit Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Summit Resources has no effect on the direction of Autosports i.e., Autosports and Summit Resources go up and down completely randomly.
Pair Corralation between Autosports and Summit Resources
Assuming the 90 days trading horizon Autosports Group is expected to under-perform the Summit Resources. But the stock apears to be less risky and, when comparing its historical volatility, Autosports Group is 49.62 times less risky than Summit Resources. The stock trades about -0.57 of its potential returns per unit of risk. The Summit Resources Limited is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 0.35 in Summit Resources Limited on September 1, 2024 and sell it today you would earn a total of 0.95 from holding Summit Resources Limited or generate 271.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Autosports Group vs. Summit Resources Limited
Performance |
| Timeline |
| Autosports Group |
| Summit Resources |
Autosports and Summit Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Autosports and Summit Resources
The main advantage of trading using opposite Autosports and Summit Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Autosports position performs unexpectedly, Summit 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 Summit Resources will offset losses from the drop in Summit Resources' long position.| Autosports vs. Summit Resources Limited | Autosports vs. iShares Global Healthcare | Autosports vs. Australian Dairy Farms | Autosports vs. Adriatic Metals Plc |
| Summit Resources vs. Northern Star Resources | Summit Resources vs. Evolution Mining | Summit Resources vs. Bluescope Steel | Summit Resources vs. Sandfire Resources NL |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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