Correlation Between AUST AGRICULTURAL and Granite Construction
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and Granite Construction 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 Granite Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and Granite Construction, you can compare the effects of market volatilities on AUST AGRICULTURAL and Granite Construction 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 Granite Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and Granite Construction.
Diversification Opportunities for AUST AGRICULTURAL and Granite Construction
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between AUST and Granite is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Granite Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Construction 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 Granite Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Construction has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Granite Construction go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and Granite Construction
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the Granite Construction. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 1.22 times less risky than Granite Construction. The stock trades about 0.0 of its potential returns per unit of risk. The Granite Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 3,475 in Granite Construction on November 28, 2024 and sell it today you would earn a total of 4,275 from holding Granite Construction or generate 123.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AUST AGRICULTURAL vs. Granite Construction
Performance |
| Timeline |
| AUST AGRICULTURAL |
| Granite Construction |
AUST AGRICULTURAL and Granite Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and Granite Construction
The main advantage of trading using opposite AUST AGRICULTURAL and Granite Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, Granite Construction 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 Granite Construction will offset losses from the drop in Granite Construction's long position.| AUST AGRICULTURAL vs. Chengdu PUTIAN Telecommunications | AUST AGRICULTURAL vs. Ebro Foods SA | AUST AGRICULTURAL vs. Cairo Communication SpA | AUST AGRICULTURAL vs. Tower One Wireless |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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