Correlation Between Australian Agricultural and SalMar ASA
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and SalMar ASA 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 SalMar ASA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and SalMar ASA, you can compare the effects of market volatilities on Australian Agricultural and SalMar ASA 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 SalMar ASA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and SalMar ASA.
Diversification Opportunities for Australian Agricultural and SalMar ASA
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Australian and SalMar is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and SalMar ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SalMar ASA 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 SalMar ASA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SalMar ASA has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and SalMar ASA go up and down completely randomly.
Pair Corralation between Australian Agricultural and SalMar ASA
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.96 times more return on investment than SalMar ASA. However, Australian Agricultural is 1.04 times less risky than SalMar ASA. It trades about 0.02 of its potential returns per unit of risk. SalMar ASA is currently generating about -0.04 per unit of risk. If you would invest 81.00 in Australian Agricultural on September 3, 2024 and sell it today you would earn a total of 2.00 from holding Australian Agricultural or generate 2.47% 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. SalMar ASA
Performance |
| Timeline |
| Australian Agricultural |
| SalMar ASA |
Australian Agricultural and SalMar ASA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and SalMar ASA
The main advantage of trading using opposite Australian Agricultural and SalMar ASA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, SalMar ASA 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 SalMar ASA will offset losses from the drop in SalMar ASA'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 |
| SalMar ASA vs. Cal Maine Foods | SalMar ASA vs. Sumitomo Mitsui Construction | SalMar ASA vs. Dairy Farm International | SalMar ASA vs. Food Life Companies |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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