Correlation Between Australian Agricultural and TITAN MACHINERY
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and TITAN MACHINERY 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 TITAN MACHINERY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and TITAN MACHINERY, you can compare the effects of market volatilities on Australian Agricultural and TITAN MACHINERY 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 TITAN MACHINERY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and TITAN MACHINERY.
Diversification Opportunities for Australian Agricultural and TITAN MACHINERY
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and TITAN is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and TITAN MACHINERY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TITAN MACHINERY 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 TITAN MACHINERY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TITAN MACHINERY has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and TITAN MACHINERY go up and down completely randomly.
Pair Corralation between Australian Agricultural and TITAN MACHINERY
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the TITAN MACHINERY. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.81 times less risky than TITAN MACHINERY. The stock trades about -0.04 of its potential returns per unit of risk. The TITAN MACHINERY is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,280 in TITAN MACHINERY on August 31, 2024 and sell it today you would earn a total of 200.00 from holding TITAN MACHINERY or generate 15.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. TITAN MACHINERY
Performance |
| Timeline |
| Australian Agricultural |
| TITAN MACHINERY |
Australian Agricultural and TITAN MACHINERY Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and TITAN MACHINERY
The main advantage of trading using opposite Australian Agricultural and TITAN MACHINERY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, TITAN MACHINERY 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 TITAN MACHINERY will offset losses from the drop in TITAN MACHINERY's long position.| Australian Agricultural vs. SalMar ASA | Australian Agricultural vs. Superior Plus Corp | Australian Agricultural vs. NMI Holdings | Australian Agricultural vs. Origin Agritech |
| TITAN MACHINERY vs. Richardson Electronics | TITAN MACHINERY vs. KIMBALL ELECTRONICS | TITAN MACHINERY vs. CapitaLand Investment Limited | TITAN MACHINERY vs. WisdomTree Investments |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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