Correlation Between Beam Communications and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Beam Communications and Australian Strategic 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 Beam Communications and Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Beam Communications Holdings and Australian Strategic Materials, you can compare the effects of market volatilities on Beam Communications and Australian Strategic 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 Beam Communications with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Beam Communications and Australian Strategic.
Diversification Opportunities for Beam Communications and Australian Strategic
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Beam and Australian is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Beam Communications Holdings and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Beam Communications 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 Beam Communications Holdings are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Beam Communications i.e., Beam Communications and Australian Strategic go up and down completely randomly.
Pair Corralation between Beam Communications and Australian Strategic
Assuming the 90 days trading horizon Beam Communications Holdings is expected to generate 1.08 times more return on investment than Australian Strategic. However, Beam Communications is 1.08 times more volatile than Australian Strategic Materials. It trades about -0.02 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.03 per unit of risk. If you would invest 20.00 in Beam Communications Holdings on November 9, 2024 and sell it today you would lose (13.20) from holding Beam Communications Holdings or give up 66.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Beam Communications Holdings vs. Australian Strategic Materials
Performance |
| Timeline |
| Beam Communications |
| Australian Strategic |
Beam Communications and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Beam Communications and Australian Strategic
The main advantage of trading using opposite Beam Communications and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beam Communications position performs unexpectedly, Australian Strategic 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 Australian Strategic will offset losses from the drop in Australian Strategic's long position.| Beam Communications vs. Westpac Banking | Beam Communications vs. Ecofibre | Beam Communications vs. iShares Global Healthcare | Beam Communications vs. Australian Dairy Farms |
| Australian Strategic vs. Evolution Mining | Australian Strategic vs. Bluescope Steel | Australian Strategic vs. Perseus Mining | Australian Strategic vs. Champion Iron |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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