Correlation Between Australian Agricultural and InterContinental
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and InterContinental 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 InterContinental into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and InterContinental Hotels Group, you can compare the effects of market volatilities on Australian Agricultural and InterContinental 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 InterContinental. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and InterContinental.
Diversification Opportunities for Australian Agricultural and InterContinental
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Australian and InterContinental is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and InterContinental Hotels Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterContinental Hotels 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 InterContinental. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterContinental Hotels has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and InterContinental go up and down completely randomly.
Pair Corralation between Australian Agricultural and InterContinental
Assuming the 90 days horizon Australian Agricultural is expected to generate 5.99 times less return on investment than InterContinental. In addition to that, Australian Agricultural is 1.35 times more volatile than InterContinental Hotels Group. It trades about 0.04 of its total potential returns per unit of risk. InterContinental Hotels Group is currently generating about 0.33 per unit of volatility. If you would invest 8,947 in InterContinental Hotels Group on August 28, 2024 and sell it today you would earn a total of 2,753 from holding InterContinental Hotels Group or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. InterContinental Hotels Group
Performance |
| Timeline |
| Australian Agricultural |
| InterContinental Hotels |
Australian Agricultural and InterContinental Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and InterContinental
The main advantage of trading using opposite Australian Agricultural and InterContinental positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, InterContinental 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 InterContinental will offset losses from the drop in InterContinental's long position.| Australian Agricultural vs. Superior Plus Corp | Australian Agricultural vs. NMI Holdings | Australian Agricultural vs. Origin Agritech | Australian Agricultural vs. SIVERS SEMICONDUCTORS AB |
| InterContinental vs. COMMERCIAL VEHICLE | InterContinental vs. ITALIAN WINE BRANDS | InterContinental vs. Zijin Mining Group | InterContinental vs. Perseus Mining Limited |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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