Correlation Between Australian Agricultural and Longfor Group
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Longfor Group 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 Longfor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Longfor Group Holdings, you can compare the effects of market volatilities on Australian Agricultural and Longfor Group 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 Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Longfor Group.
Diversification Opportunities for Australian Agricultural and Longfor Group
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Longfor is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings 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 Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Longfor Group go up and down completely randomly.
Pair Corralation between Australian Agricultural and Longfor Group
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.52 times more return on investment than Longfor Group. However, Australian Agricultural is 1.91 times less risky than Longfor Group. It trades about 0.01 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about -0.2 per unit of risk. If you would invest 83.00 in Australian Agricultural on September 3, 2024 and sell it today you would earn a total of 0.00 from holding Australian Agricultural or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Longfor Group Holdings
Performance |
| Timeline |
| Australian Agricultural |
| Longfor Group Holdings |
Australian Agricultural and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Longfor Group
The main advantage of trading using opposite Australian Agricultural and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Longfor Group 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 Longfor Group will offset losses from the drop in Longfor Group'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 |
| Longfor Group vs. AUST AGRICULTURAL | Longfor Group vs. Sumitomo Mitsui Construction | Longfor Group vs. Air Lease | Longfor Group vs. Australian Agricultural |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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