Correlation Between Australian Agricultural and FLOW TRADERS
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and FLOW TRADERS 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 FLOW TRADERS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and FLOW TRADERS LTD, you can compare the effects of market volatilities on Australian Agricultural and FLOW TRADERS 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 FLOW TRADERS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and FLOW TRADERS.
Diversification Opportunities for Australian Agricultural and FLOW TRADERS
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and FLOW is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and FLOW TRADERS LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FLOW TRADERS LTD 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 FLOW TRADERS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FLOW TRADERS LTD has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and FLOW TRADERS go up and down completely randomly.
Pair Corralation between Australian Agricultural and FLOW TRADERS
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the FLOW TRADERS. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.01 times less risky than FLOW TRADERS. The stock trades about -0.02 of its potential returns per unit of risk. The FLOW TRADERS LTD is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,191 in FLOW TRADERS LTD on October 12, 2024 and sell it today you would earn a total of 131.00 from holding FLOW TRADERS LTD or generate 5.98% 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. FLOW TRADERS LTD
Performance |
| Timeline |
| Australian Agricultural |
| FLOW TRADERS LTD |
Australian Agricultural and FLOW TRADERS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and FLOW TRADERS
The main advantage of trading using opposite Australian Agricultural and FLOW TRADERS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, FLOW TRADERS 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 FLOW TRADERS will offset losses from the drop in FLOW TRADERS's long position.| Australian Agricultural vs. Wenzhou Kangning Hospital | Australian Agricultural vs. TYSON FOODS A | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Planet Fitness |
| FLOW TRADERS vs. Nufarm Limited | FLOW TRADERS vs. Australian Agricultural | FLOW TRADERS vs. Daito Trust Construction | FLOW TRADERS vs. Chongqing Machinery Electric |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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