Correlation Between Australian Strategic and Beam Communications
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and Beam Communications 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 Beam Communications 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 Beam Communications Holdings, you can compare the effects of market volatilities on Australian Strategic and Beam Communications 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 Beam Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Beam Communications.
Diversification Opportunities for Australian Strategic and Beam Communications
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and Beam is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Beam Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beam Communications 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 Beam Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beam Communications has no effect on the direction of Australian Strategic i.e., Australian Strategic and Beam Communications go up and down completely randomly.
Pair Corralation between Australian Strategic and Beam Communications
Assuming the 90 days trading horizon Australian Strategic Materials is expected to under-perform the Beam Communications. But the stock apears to be less risky and, when comparing its historical volatility, Australian Strategic Materials is 2.45 times less risky than Beam Communications. The stock trades about -0.14 of its potential returns per unit of risk. The Beam Communications Holdings is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6.20 in Beam Communications Holdings on November 9, 2024 and sell it today you would earn a total of 0.60 from holding Beam Communications Holdings or generate 9.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Strategic Materials vs. Beam Communications Holdings
Performance |
| Timeline |
| Australian Strategic |
| Beam Communications |
Australian Strategic and Beam Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and Beam Communications
The main advantage of trading using opposite Australian Strategic and Beam Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, Beam Communications 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 Beam Communications will offset losses from the drop in Beam Communications' long position.| Australian Strategic vs. Evolution Mining | Australian Strategic vs. Bluescope Steel | Australian Strategic vs. Perseus Mining | Australian Strategic vs. Champion Iron |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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