Correlation Between Australian Agricultural and AS Tallink
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and AS Tallink 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 AS Tallink into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and AS Tallink Grupp, you can compare the effects of market volatilities on Australian Agricultural and AS Tallink 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 AS Tallink. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and AS Tallink.
Diversification Opportunities for Australian Agricultural and AS Tallink
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and T5N is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and AS Tallink Grupp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AS Tallink Grupp 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 AS Tallink. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AS Tallink Grupp has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and AS Tallink go up and down completely randomly.
Pair Corralation between Australian Agricultural and AS Tallink
Assuming the 90 days horizon Australian Agricultural is expected to generate 1.26 times more return on investment than AS Tallink. However, Australian Agricultural is 1.26 times more volatile than AS Tallink Grupp. It trades about -0.02 of its potential returns per unit of risk. AS Tallink Grupp is currently generating about -0.08 per unit of risk. If you would invest 83.00 in Australian Agricultural on September 12, 2024 and sell it today you would lose (1.00) from holding Australian Agricultural or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Australian Agricultural vs. AS Tallink Grupp
Performance |
| Timeline |
| Australian Agricultural |
| AS Tallink Grupp |
Australian Agricultural and AS Tallink Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and AS Tallink
The main advantage of trading using opposite Australian Agricultural and AS Tallink positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, AS Tallink 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 AS Tallink will offset losses from the drop in AS Tallink's long position.| Australian Agricultural vs. Marie Brizard Wine | Australian Agricultural vs. Natural Health Trends | Australian Agricultural vs. Sixt Leasing SE | Australian Agricultural vs. Air Lease |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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