Correlation Between Australian Agricultural and Klöckner
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Klöckner 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 Klöckner into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Klckner Co SE, you can compare the effects of market volatilities on Australian Agricultural and Klöckner 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 Klöckner. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Klöckner.
Diversification Opportunities for Australian Agricultural and Klöckner
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Klöckner is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Klckner Co SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Klckner Co SE 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 Klöckner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Klckner Co SE has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Klöckner go up and down completely randomly.
Pair Corralation between Australian Agricultural and Klöckner
Assuming the 90 days horizon Australian Agricultural is expected to generate 1.01 times more return on investment than Klöckner. However, Australian Agricultural is 1.01 times more volatile than Klckner Co SE. It trades about 0.01 of its potential returns per unit of risk. Klckner Co SE is currently generating about -0.05 per unit of risk. If you would invest 85.00 in Australian Agricultural on September 3, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.18% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Klckner Co SE
Performance |
| Timeline |
| Australian Agricultural |
| Klckner Co SE |
Australian Agricultural and Klöckner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Klöckner
The main advantage of trading using opposite Australian Agricultural and Klöckner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Klöckner 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 Klöckner will offset losses from the drop in Klöckner'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 |
| Klöckner vs. MCEWEN MINING INC | Klöckner vs. GRUPO CARSO A1 | Klöckner vs. HYATT HOTELS A | Klöckner vs. Choice Hotels International |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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