Correlation Between Australian Agricultural and OSRAM LICHT
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and OSRAM LICHT 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 OSRAM LICHT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and OSRAM LICHT N, you can compare the effects of market volatilities on Australian Agricultural and OSRAM LICHT 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 OSRAM LICHT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and OSRAM LICHT.
Diversification Opportunities for Australian Agricultural and OSRAM LICHT
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and OSRAM is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and OSRAM LICHT N in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OSRAM LICHT N 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 OSRAM LICHT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OSRAM LICHT N has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and OSRAM LICHT go up and down completely randomly.
Pair Corralation between Australian Agricultural and OSRAM LICHT
Assuming the 90 days horizon Australian Agricultural is expected to generate 23.9 times less return on investment than OSRAM LICHT. In addition to that, Australian Agricultural is 4.2 times more volatile than OSRAM LICHT N. It trades about 0.0 of its total potential returns per unit of risk. OSRAM LICHT N is currently generating about 0.05 per unit of volatility. If you would invest 4,878 in OSRAM LICHT N on August 28, 2024 and sell it today you would earn a total of 242.00 from holding OSRAM LICHT N or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.53% |
| Values | Daily Returns |
Australian Agricultural vs. OSRAM LICHT N
Performance |
| Timeline |
| Australian Agricultural |
| OSRAM LICHT N |
Australian Agricultural and OSRAM LICHT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and OSRAM LICHT
The main advantage of trading using opposite Australian Agricultural and OSRAM LICHT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, OSRAM LICHT 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 OSRAM LICHT will offset losses from the drop in OSRAM LICHT's long position.| Australian Agricultural vs. Virtus Investment Partners | Australian Agricultural vs. Gladstone Investment | Australian Agricultural vs. EAT WELL INVESTMENT | Australian Agricultural vs. Seven West Media |
| OSRAM LICHT vs. Computer And Technologies | OSRAM LICHT vs. EEDUCATION ALBERT AB | OSRAM LICHT vs. Grand Canyon Education | OSRAM LICHT vs. Spirent Communications plc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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