Correlation Between Australian Strategic and Global Energy
Can any of the company-specific risk be diversified away by investing in both Australian Strategic and Global 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 Global 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 Global Energy Metals, you can compare the effects of market volatilities on Australian Strategic and Global 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 Global Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Strategic and Global Energy.
Diversification Opportunities for Australian Strategic and Global Energy
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Global is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Global Energy Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Energy Metals 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 Global Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Energy Metals has no effect on the direction of Australian Strategic i.e., Australian Strategic and Global Energy go up and down completely randomly.
Pair Corralation between Australian Strategic and Global Energy
Assuming the 90 days horizon Australian Strategic Materials is expected to generate 0.52 times more return on investment than Global Energy. However, Australian Strategic Materials is 1.92 times less risky than Global Energy. It trades about -0.03 of its potential returns per unit of risk. Global Energy Metals is currently generating about -0.12 per unit of risk. If you would invest 36.00 in Australian Strategic Materials on August 25, 2024 and sell it today you would lose (3.00) from holding Australian Strategic Materials or give up 8.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Strategic Materials vs. Global Energy Metals
Performance |
| Timeline |
| Australian Strategic |
| Global Energy Metals |
Australian Strategic and Global Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Strategic and Global Energy
The main advantage of trading using opposite Australian Strategic and Global Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Strategic position performs unexpectedly, Global 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 Global Energy will offset losses from the drop in Global Energy's long position.| Australian Strategic vs. Norra Metals Corp | Australian Strategic vs. ZincX Resources Corp | Australian Strategic vs. Nuinsco Resources Limited | Australian Strategic vs. South Star Battery |
| Global Energy vs. Norra Metals Corp | Global Energy vs. ZincX Resources Corp | Global Energy vs. Nuinsco Resources Limited | Global Energy vs. South Star Battery |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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