Correlation Between AUST AGRICULTURAL and Longfor Group
Can any of the company-specific risk be diversified away by investing in both AUST AGRICULTURAL and Longfor Group 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 Longfor Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AUST AGRICULTURAL and Longfor Group Holdings, you can compare the effects of market volatilities on AUST AGRICULTURAL and Longfor Group 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 Longfor Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and Longfor Group.
Diversification Opportunities for AUST AGRICULTURAL and Longfor Group
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between AUST and Longfor is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Longfor Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Longfor Group Holdings 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 Longfor Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Longfor Group Holdings has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Longfor Group go up and down completely randomly.
Pair Corralation between AUST AGRICULTURAL and Longfor Group
Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 57.05 times less return on investment than Longfor Group. But when comparing it to its historical volatility, AUST AGRICULTURAL is 4.31 times less risky than Longfor Group. It trades about 0.0 of its potential returns per unit of risk. Longfor Group Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 84.00 in Longfor Group Holdings on September 3, 2024 and sell it today you would earn a total of 46.00 from holding Longfor Group Holdings or generate 54.76% 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. Longfor Group Holdings
Performance |
| Timeline |
| AUST AGRICULTURAL |
| Longfor Group Holdings |
AUST AGRICULTURAL and Longfor Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AUST AGRICULTURAL and Longfor Group
The main advantage of trading using opposite AUST AGRICULTURAL and Longfor Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AUST AGRICULTURAL position performs unexpectedly, Longfor Group 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 Longfor Group will offset losses from the drop in Longfor Group's long position.| AUST AGRICULTURAL vs. Beijing Media | AUST AGRICULTURAL vs. PARKEN Sport Entertainment | AUST AGRICULTURAL vs. AUSTEVOLL SEAFOOD | AUST AGRICULTURAL vs. RCS MediaGroup SpA |
| Longfor Group vs. AUST AGRICULTURAL | Longfor Group vs. Sumitomo Mitsui Construction | Longfor Group vs. Air Lease | Longfor Group vs. Australian Agricultural |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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