Correlation Between AUST AGRICULTURAL and INPOST SA
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and INPOST SA 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 AUST AGRICULTURAL and INPOST SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and INPOST SA EO, you can compare the effects of market volatilities on AUST AGRICULTURAL and INPOST SA 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 AUST AGRICULTURAL with a short position of INPOST SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and INPOST SA.
Diversification Opportunities for AUST AGRICULTURAL and INPOST SA
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AUST and INPOST is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and INPOST SA EO in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on INPOST SA EO and AUST 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 AUST AGRICULTURAL are associated (or correlated) with INPOST SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of INPOST SA EO has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and INPOST SA go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and INPOST SA
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 1.45 times less return on investment than INPOST SA. But when comparing it to its historical volatility, AUST AGRICULTURAL is 1.49 times less risky than INPOST SA. It trades about 0.01 of its potential returns per unit of risk. INPOST SA EO is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,546 in INPOST SA EO on October 26, 2024 and sell it today you would earn a total of 15.00 from holding INPOST SA EO or generate 0.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.2% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. INPOST SA EO
Performance |
| Timeline |
| AUST AGRICULTURAL |
| INPOST SA EO |
AUST AGRICULTURAL and INPOST SA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and INPOST SA
The main advantage of trading using opposite AUST AGRICULTURAL and INPOST SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, INPOST SA 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 INPOST SA will offset losses from the drop in INPOST SA's long position.| AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc |
| INPOST SA vs. AUST AGRICULTURAL | INPOST SA vs. InPlay Oil Corp | INPOST SA vs. Clean Energy Fuels | INPOST SA vs. AGRICULTBK HADR25 YC |
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.
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