Correlation Between Australian Agricultural and EQT AB
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and EQT AB 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 EQT AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and EQT AB, you can compare the effects of market volatilities on Australian Agricultural and EQT AB 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 EQT AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and EQT AB.
Diversification Opportunities for Australian Agricultural and EQT AB
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and EQT is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and EQT AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EQT AB 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 EQT AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EQT AB has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and EQT AB go up and down completely randomly.
Pair Corralation between Australian Agricultural and EQT AB
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the EQT AB. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.92 times less risky than EQT AB. The stock trades about -0.22 of its potential returns per unit of risk. The EQT AB is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 2,374 in EQT AB on September 20, 2024 and sell it today you would earn a total of 417.00 from holding EQT AB or generate 17.57% 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. EQT AB
Performance |
| Timeline |
| Australian Agricultural |
| EQT AB |
Australian Agricultural and EQT AB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and EQT AB
The main advantage of trading using opposite Australian Agricultural and EQT AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, EQT AB 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 EQT AB will offset losses from the drop in EQT AB's long position.| Australian Agricultural vs. MCEWEN MINING INC | Australian Agricultural vs. CEOTRONICS | Australian Agricultural vs. Cleanaway Waste Management | Australian Agricultural vs. Corporate Travel Management |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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