Correlation Between Australian Agricultural and AUTO TRADER
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and AUTO TRADER 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 AUTO TRADER into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and AUTO TRADER ADR, you can compare the effects of market volatilities on Australian Agricultural and AUTO TRADER 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 AUTO TRADER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and AUTO TRADER.
Diversification Opportunities for Australian Agricultural and AUTO TRADER
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and AUTO is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and AUTO TRADER ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUTO TRADER ADR 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 AUTO TRADER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUTO TRADER ADR has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and AUTO TRADER go up and down completely randomly.
Pair Corralation between Australian Agricultural and AUTO TRADER
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.9 times more return on investment than AUTO TRADER. However, Australian Agricultural is 1.11 times less risky than AUTO TRADER. It trades about -0.02 of its potential returns per unit of risk. AUTO TRADER ADR is currently generating about -0.15 per unit of risk. If you would invest 84.00 in Australian Agricultural on November 3, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. AUTO TRADER ADR
Performance |
| Timeline |
| Australian Agricultural |
| AUTO TRADER ADR |
Australian Agricultural and AUTO TRADER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and AUTO TRADER
The main advantage of trading using opposite Australian Agricultural and AUTO TRADER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, AUTO TRADER 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 AUTO TRADER will offset losses from the drop in AUTO TRADER's long position.| Australian Agricultural vs. Nippon Steel | Australian Agricultural vs. Khiron Life Sciences | Australian Agricultural vs. MAGNUM MINING EXP | Australian Agricultural vs. United States Steel |
| AUTO TRADER vs. Phibro Animal Health | AUTO TRADER vs. CLOVER HEALTH INV | AUTO TRADER vs. DISTRICT METALS | AUTO TRADER vs. RCI Hospitality Holdings |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
Other Complementary Tools
| Insider Screener Find insiders across different sectors to evaluate their impact on performance | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities |