Correlation Between AUST AGRICULTURAL and ELL ENVIRONHLDGS
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and ELL ENVIRONHLDGS HD 0001, you can compare the effects of market volatilities on AUST AGRICULTURAL and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and ELL ENVIRONHLDGS.
Diversification Opportunities for AUST AGRICULTURAL and ELL ENVIRONHLDGS
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUST and ELL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and ELL ENVIRONHLDGS HD 0001 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ELL ENVIRONHLDGS has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and ELL ENVIRONHLDGS go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and ELL ENVIRONHLDGS
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the ELL ENVIRONHLDGS. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 57.71 times less risky than ELL ENVIRONHLDGS. The stock trades about -0.02 of its potential returns per unit of risk. The ELL ENVIRONHLDGS HD 0001 is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1.70 in ELL ENVIRONHLDGS HD 0001 on November 5, 2024 and sell it today you would lose (0.35) from holding ELL ENVIRONHLDGS HD 0001 or give up 20.59% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. ELL ENVIRONHLDGS HD 0001
Performance |
| Timeline |
| AUST AGRICULTURAL |
| ELL ENVIRONHLDGS |
AUST AGRICULTURAL and ELL ENVIRONHLDGS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and ELL ENVIRONHLDGS
The main advantage of trading using opposite AUST AGRICULTURAL and ELL ENVIRONHLDGS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS will offset losses from the drop in ELL ENVIRONHLDGS's long position.| AUST AGRICULTURAL vs. Zijin Mining Group | AUST AGRICULTURAL vs. PT Steel Pipe | AUST AGRICULTURAL vs. CORNISH METALS INC | AUST AGRICULTURAL vs. BlueScope Steel Limited |
| ELL ENVIRONHLDGS vs. AGRICULTBK HADR25 YC | ELL ENVIRONHLDGS vs. Titan Machinery | ELL ENVIRONHLDGS vs. Australian Agricultural | ELL ENVIRONHLDGS vs. Hitachi Construction Machinery |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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