Correlation Between AUST AGRICULTURAL and MOUNT GIBSON
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and MOUNT GIBSON 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 MOUNT GIBSON into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and MOUNT GIBSON IRON, you can compare the effects of market volatilities on AUST AGRICULTURAL and MOUNT GIBSON 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 MOUNT GIBSON. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and MOUNT GIBSON.
Diversification Opportunities for AUST AGRICULTURAL and MOUNT GIBSON
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUST and MOUNT is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and MOUNT GIBSON IRON in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MOUNT GIBSON IRON 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 MOUNT GIBSON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MOUNT GIBSON IRON has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and MOUNT GIBSON go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and MOUNT GIBSON
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 48.74 times less return on investment than MOUNT GIBSON. But when comparing it to its historical volatility, AUST AGRICULTURAL is 3.63 times less risky than MOUNT GIBSON. It trades about 0.0 of its potential returns per unit of risk. MOUNT GIBSON IRON is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 18.00 in MOUNT GIBSON IRON on October 26, 2024 and sell it today you would earn a total of 1.00 from holding MOUNT GIBSON IRON or generate 5.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. MOUNT GIBSON IRON
Performance |
| Timeline |
| AUST AGRICULTURAL |
| MOUNT GIBSON IRON |
AUST AGRICULTURAL and MOUNT GIBSON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and MOUNT GIBSON
The main advantage of trading using opposite AUST AGRICULTURAL and MOUNT GIBSON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, MOUNT GIBSON 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 MOUNT GIBSON will offset losses from the drop in MOUNT GIBSON's long position.| AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc | AUST AGRICULTURAL vs. Apple Inc |
| MOUNT GIBSON vs. Chesapeake Utilities | MOUNT GIBSON vs. ANTA SPORTS PRODUCT | MOUNT GIBSON vs. Algonquin Power Utilities | MOUNT GIBSON vs. United States Steel |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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