Correlation Between Australian United and Black Cat
Can any of the company-specific risk be diversified away by investing in both Australian United and Black Cat 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 United and Black Cat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian United Investment and Black Cat Syndicate, you can compare the effects of market volatilities on Australian United and Black Cat 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 United with a short position of Black Cat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Black Cat.
Diversification Opportunities for Australian United and Black Cat
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Black is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Black Cat Syndicate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Black Cat Syndicate and Australian United 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 United Investment are associated (or correlated) with Black Cat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Black Cat Syndicate has no effect on the direction of Australian United i.e., Australian United and Black Cat go up and down completely randomly.
Pair Corralation between Australian United and Black Cat
Assuming the 90 days trading horizon Australian United Investment is expected to under-perform the Black Cat. But the stock apears to be less risky and, when comparing its historical volatility, Australian United Investment is 4.68 times less risky than Black Cat. The stock trades about -0.15 of its potential returns per unit of risk. The Black Cat Syndicate is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 59.00 in Black Cat Syndicate on September 1, 2024 and sell it today you would earn a total of 12.00 from holding Black Cat Syndicate or generate 20.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Australian United Investment vs. Black Cat Syndicate
Performance |
| Timeline |
| Australian United |
| Black Cat Syndicate |
Australian United and Black Cat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and Black Cat
The main advantage of trading using opposite Australian United and Black Cat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Black Cat 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 Black Cat will offset losses from the drop in Black Cat's long position.| Australian United vs. Sandon Capital Investments | Australian United vs. Pinnacle Investment Management | Australian United vs. Macquarie Technology Group | Australian United vs. BKI Investment |
| Black Cat vs. Northern Star Resources | Black Cat vs. Evolution Mining | Black Cat vs. Bluescope Steel | Black Cat 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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