Correlation Between Australian United and Dug Technology
Can any of the company-specific risk be diversified away by investing in both Australian United and Dug Technology 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 Dug Technology 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 Dug Technology, you can compare the effects of market volatilities on Australian United and Dug Technology 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 Dug Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Dug Technology.
Diversification Opportunities for Australian United and Dug Technology
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Dug is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Dug Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dug 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 Dug Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dug Technology has no effect on the direction of Australian United i.e., Australian United and Dug Technology go up and down completely randomly.
Pair Corralation between Australian United and Dug Technology
Assuming the 90 days trading horizon Australian United is expected to generate 8.31 times less return on investment than Dug Technology. But when comparing it to its historical volatility, Australian United Investment is 4.24 times less risky than Dug Technology. It trades about 0.05 of its potential returns per unit of risk. Dug Technology is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 53.00 in Dug Technology on September 3, 2024 and sell it today you would earn a total of 114.00 from holding Dug Technology or generate 215.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian United Investment vs. Dug Technology
Performance |
| Timeline |
| Australian United |
| Dug Technology |
Australian United and Dug Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian United and Dug Technology
The main advantage of trading using opposite Australian United and Dug Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Dug Technology 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 Dug Technology will offset losses from the drop in Dug Technology's long position.The idea behind Australian United Investment and Dug 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.| Dug Technology vs. Commonwealth Bank | Dug Technology vs. Commonwealth Bank of | Dug Technology vs. Champion Iron | Dug Technology vs. iShares Global Healthcare |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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