Correlation Between Australian Agricultural and Sparta AG
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Sparta AG 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 Sparta AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Sparta AG, you can compare the effects of market volatilities on Australian Agricultural and Sparta AG 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 Sparta AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Sparta AG.
Diversification Opportunities for Australian Agricultural and Sparta AG
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Sparta is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Sparta AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sparta AG 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 Sparta AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sparta AG has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Sparta AG go up and down completely randomly.
Pair Corralation between Australian Agricultural and Sparta AG
Assuming the 90 days horizon Australian Agricultural is expected to under-perform the Sparta AG. But the stock apears to be less risky and, when comparing its historical volatility, Australian Agricultural is 1.12 times less risky than Sparta AG. The stock trades about -0.02 of its potential returns per unit of risk. The Sparta AG is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 3,500 in Sparta AG on September 2, 2024 and sell it today you would lose (260.00) from holding Sparta AG or give up 7.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Sparta AG
Performance |
| Timeline |
| Australian Agricultural |
| Sparta AG |
Australian Agricultural and Sparta AG Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Sparta AG
The main advantage of trading using opposite Australian Agricultural and Sparta AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Sparta AG 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 Sparta AG will offset losses from the drop in Sparta AG's long position.| Australian Agricultural vs. SalMar ASA | Australian Agricultural vs. Superior Plus Corp | Australian Agricultural vs. NMI Holdings | Australian Agricultural vs. Origin Agritech |
| Sparta AG vs. Ameriprise Financial | Sparta AG vs. Ares Management Corp | Sparta AG vs. Superior Plus Corp | Sparta AG vs. NMI Holdings |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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