Correlation Between Australian United and Bio Gene
Can any of the company-specific risk be diversified away by investing in both Australian United and Bio Gene 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 Bio Gene 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 Bio Gene Technology, you can compare the effects of market volatilities on Australian United and Bio Gene 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 Bio Gene. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Bio Gene.
Diversification Opportunities for Australian United and Bio Gene
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Bio is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Bio Gene Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio Gene Technology 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 Bio Gene. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio Gene Technology has no effect on the direction of Australian United i.e., Australian United and Bio Gene go up and down completely randomly.
Pair Corralation between Australian United and Bio Gene
Assuming the 90 days trading horizon Australian United Investment is expected to generate 0.13 times more return on investment than Bio Gene. However, Australian United Investment is 7.5 times less risky than Bio Gene. It trades about 0.05 of its potential returns per unit of risk. Bio Gene Technology is currently generating about -0.01 per unit of risk. If you would invest 917.00 in Australian United Investment on September 3, 2024 and sell it today you would earn a total of 151.00 from holding Australian United Investment or generate 16.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian United Investment vs. Bio Gene Technology
Performance |
| Timeline |
| Australian United |
| Bio Gene Technology |
Australian United and Bio Gene Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and Bio Gene
The main advantage of trading using opposite Australian United and Bio Gene positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Bio Gene 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 Bio Gene will offset losses from the drop in Bio Gene's long position.The idea behind Australian United Investment and Bio Gene Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Bio Gene vs. Northern Star Resources | Bio Gene vs. Evolution Mining | Bio Gene vs. Bluescope Steel | Bio Gene vs. Aneka Tambang Tbk |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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