Correlation Between Australian Agricultural and 2G ENERGY
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and 2G 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 Agricultural and 2G ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and 2G ENERGY , you can compare the effects of market volatilities on Australian Agricultural and 2G 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 Agricultural with a short position of 2G ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and 2G ENERGY.
Diversification Opportunities for Australian Agricultural and 2G ENERGY
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and 2GB is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and 2G ENERGY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2G ENERGY and Australian Agricultural 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 Agricultural are associated (or correlated) with 2G ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2G ENERGY has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and 2G ENERGY go up and down completely randomly.
Pair Corralation between Australian Agricultural and 2G ENERGY
Assuming the 90 days horizon Australian Agricultural is expected to generate 7.03 times less return on investment than 2G ENERGY. But when comparing it to its historical volatility, Australian Agricultural is 1.35 times less risky than 2G ENERGY. It trades about 0.0 of its potential returns per unit of risk. 2G ENERGY is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,101 in 2G ENERGY on September 3, 2024 and sell it today you would earn a total of 94.00 from holding 2G ENERGY or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. 2G ENERGY
Performance |
| Timeline |
| Australian Agricultural |
| 2G ENERGY |
Australian Agricultural and 2G ENERGY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and 2G ENERGY
The main advantage of trading using opposite Australian Agricultural and 2G ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, 2G 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 2G ENERGY will offset losses from the drop in 2G ENERGY's long position.| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. SalMar ASA |
| 2G ENERGY vs. Hyatt Hotels | 2G ENERGY vs. MHP Hotel AG | 2G ENERGY vs. HYATT HOTELS A | 2G ENERGY vs. InterContinental Hotels Group |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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