Correlation Between Australian Unity and Autosports
Can any of the company-specific risk be diversified away by investing in both Australian Unity and Autosports 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 Australian Unity and Autosports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Unity Ltd and Autosports Group, you can compare the effects of market volatilities on Australian Unity and Autosports 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 Australian Unity with a short position of Autosports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Unity and Autosports.
Diversification Opportunities for Australian Unity and Autosports
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Australian and Autosports is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Australian Unity Ltd and Autosports Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Autosports Group and Australian Unity 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 Australian Unity Ltd are associated (or correlated) with Autosports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Autosports Group has no effect on the direction of Australian Unity i.e., Australian Unity and Autosports go up and down completely randomly.
Pair Corralation between Australian Unity and Autosports
Assuming the 90 days trading horizon Australian Unity is expected to generate 1.21 times less return on investment than Autosports. But when comparing it to its historical volatility, Australian Unity Ltd is 2.18 times less risky than Autosports. It trades about 0.01 of its potential returns per unit of risk. Autosports Group is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 182.00 in Autosports Group on October 23, 2024 and sell it today you would lose (7.00) from holding Autosports Group or give up 3.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Unity Ltd vs. Autosports Group
Performance |
| Timeline |
| Australian Unity |
| Autosports Group |
Australian Unity and Autosports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Unity and Autosports
The main advantage of trading using opposite Australian Unity and Autosports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Unity position performs unexpectedly, Autosports 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 Autosports will offset losses from the drop in Autosports' long position.| Australian Unity vs. Autosports Group | Australian Unity vs. Infomedia | Australian Unity vs. Black Rock Mining | Australian Unity vs. Kneomedia |
| Autosports vs. Renascor Resources | Autosports vs. Venus Metals | Autosports vs. Havilah Resources | Autosports vs. Asara Resources |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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