Correlation Between Australian Strategic and Avira Energy
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and Avira Energy 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 Strategic and Avira Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Strategic Materials and Avira Energy, you can compare the effects of market volatilities on Australian Strategic and Avira Energy 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 Strategic with a short position of Avira Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Avira Energy.
Diversification Opportunities for Australian Strategic and Avira Energy
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Australian and Avira is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Avira Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avira Energy and Australian Strategic 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 Strategic Materials are associated (or correlated) with Avira Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avira Energy has no effect on the direction of Australian Strategic i.e., Australian Strategic and Avira Energy go up and down completely randomly.
Pair Corralation between Australian Strategic and Avira Energy
Assuming the 90 days trading horizon Australian Strategic Materials is expected to under-perform the Avira Energy. But the stock apears to be less risky and, when comparing its historical volatility, Australian Strategic Materials is 3.0 times less risky than Avira Energy. The stock trades about -0.03 of its potential returns per unit of risk. The Avira Energy is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6.00 in Avira Energy on December 4, 2024 and sell it today you would lose (5.20) from holding Avira Energy or give up 86.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
Australian Strategic Materials vs. Avira Energy
Performance |
| Timeline |
| Australian Strategic |
| Avira Energy |
Australian Strategic and Avira Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and Avira Energy
The main advantage of trading using opposite Australian Strategic and Avira Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, Avira Energy 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 Avira Energy will offset losses from the drop in Avira Energy's long position.| Australian Strategic vs. Alternative Investment Trust | Australian Strategic vs. MFF Capital Investments | Australian Strategic vs. Carlton Investments | Australian Strategic vs. Bisalloy Steel Group |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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