Correlation Between Australian United and BKI Investment
Can any of the company-specific risk be diversified away by investing in both Australian United and BKI Investment 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 BKI Investment 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 BKI Investment, you can compare the effects of market volatilities on Australian United and BKI Investment 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 BKI Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and BKI Investment.
Diversification Opportunities for Australian United and BKI Investment
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and BKI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and BKI Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BKI Investment 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 BKI Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BKI Investment has no effect on the direction of Australian United i.e., Australian United and BKI Investment go up and down completely randomly.
Pair Corralation between Australian United and BKI Investment
Assuming the 90 days trading horizon Australian United Investment is expected to generate 0.86 times more return on investment than BKI Investment. However, Australian United Investment is 1.16 times less risky than BKI Investment. It trades about 0.05 of its potential returns per unit of risk. BKI Investment is currently generating about 0.02 per unit of risk. If you would invest 923.00 in Australian United Investment on August 25, 2024 and sell it today you would earn a total of 173.00 from holding Australian United Investment or generate 18.74% 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. BKI Investment
Performance |
| Timeline |
| Australian United |
| BKI Investment |
Australian United and BKI Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and BKI Investment
The main advantage of trading using opposite Australian United and BKI Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, BKI Investment 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 BKI Investment will offset losses from the drop in BKI Investment's long position.| Australian United vs. Metro Mining | Australian United vs. Super Retail Group | Australian United vs. Zoom2u Technologies | Australian United vs. Richmond Vanadium Technology |
| BKI Investment vs. Australian Foundation Investment | BKI Investment vs. GQG Partners DRC | BKI Investment vs. MFF Capital Investments | BKI Investment vs. Metrics Master Income |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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