Correlation Between Australian Agricultural and SCOR SE
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and SCOR SE 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 SCOR SE into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and SCOR SE, you can compare the effects of market volatilities on Australian Agricultural and SCOR SE 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 SCOR SE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and SCOR SE.
Diversification Opportunities for Australian Agricultural and SCOR SE
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and SCOR is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and SCOR SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCOR 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 SCOR SE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCOR SE has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and SCOR SE go up and down completely randomly.
Pair Corralation between Australian Agricultural and SCOR SE
Assuming the 90 days horizon Australian Agricultural is expected to generate 0.69 times more return on investment than SCOR SE. However, Australian Agricultural is 1.45 times less risky than SCOR SE. It trades about -0.05 of its potential returns per unit of risk. SCOR SE is currently generating about -0.09 per unit of risk. If you would invest 84.00 in Australian Agricultural on September 23, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. SCOR SE
Performance |
| Timeline |
| Australian Agricultural |
| SCOR SE |
Australian Agricultural and SCOR SE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and SCOR SE
The main advantage of trading using opposite Australian Agricultural and SCOR SE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, SCOR SE 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 SCOR SE will offset losses from the drop in SCOR SE's long position.| Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. MOWI ASA SPADR |
| SCOR SE vs. Titan Machinery | SCOR SE vs. Australian Agricultural | SCOR SE vs. Sumitomo Mitsui Construction | SCOR SE vs. SPORT LISBOA E |
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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas |