Correlation Between Australian Agricultural and Sunstone Hotel
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Sunstone Hotel 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 Sunstone Hotel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Sunstone Hotel Investors, you can compare the effects of market volatilities on Australian Agricultural and Sunstone Hotel 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 Sunstone Hotel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Sunstone Hotel.
Diversification Opportunities for Australian Agricultural and Sunstone Hotel
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Australian and Sunstone is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Sunstone Hotel Investors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sunstone Hotel Investors 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 Sunstone Hotel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sunstone Hotel Investors has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Sunstone Hotel go up and down completely randomly.
Pair Corralation between Australian Agricultural and Sunstone Hotel
Assuming the 90 days horizon Australian Agricultural is expected to generate 22.07 times less return on investment than Sunstone Hotel. But when comparing it to its historical volatility, Australian Agricultural is 1.04 times less risky than Sunstone Hotel. It trades about 0.01 of its potential returns per unit of risk. Sunstone Hotel Investors is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest 935.00 in Sunstone Hotel Investors on September 3, 2024 and sell it today you would earn a total of 85.00 from holding Sunstone Hotel Investors or generate 9.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Agricultural vs. Sunstone Hotel Investors
Performance |
| Timeline |
| Australian Agricultural |
| Sunstone Hotel Investors |
Australian Agricultural and Sunstone Hotel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Agricultural and Sunstone Hotel
The main advantage of trading using opposite Australian Agricultural and Sunstone Hotel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Sunstone Hotel 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 Sunstone Hotel will offset losses from the drop in Sunstone Hotel'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 |
| Sunstone Hotel vs. Transport International Holdings | Sunstone Hotel vs. Transportadora de Gas | Sunstone Hotel vs. IMPERIAL TOBACCO | Sunstone Hotel vs. BII Railway Transportation |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites |