Correlation Between Black Rock and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Black Rock and Australian Unity 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 Black Rock and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Black Rock Mining and Australian Unity Ltd, you can compare the effects of market volatilities on Black Rock and Australian Unity 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 Black Rock with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Black Rock and Australian Unity.
Diversification Opportunities for Black Rock and Australian Unity
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Black and Australian is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Black Rock Mining and Australian Unity Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity and Black Rock 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 Black Rock Mining are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity has no effect on the direction of Black Rock i.e., Black Rock and Australian Unity go up and down completely randomly.
Pair Corralation between Black Rock and Australian Unity
Assuming the 90 days trading horizon Black Rock Mining is expected to under-perform the Australian Unity. In addition to that, Black Rock is 9.14 times more volatile than Australian Unity Ltd. It trades about -0.02 of its total potential returns per unit of risk. Australian Unity Ltd is currently generating about -0.06 per unit of volatility. If you would invest 8,248 in Australian Unity Ltd on November 3, 2024 and sell it today you would lose (86.00) from holding Australian Unity Ltd or give up 1.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Black Rock Mining vs. Australian Unity Ltd
Performance |
| Timeline |
| Black Rock Mining |
| Australian Unity |
Black Rock and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Black Rock and Australian Unity
The main advantage of trading using opposite Black Rock and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Black Rock position performs unexpectedly, Australian Unity 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 Unity will offset losses from the drop in Australian Unity's long position.| Black Rock vs. Northern Star Resources | Black Rock vs. Evolution Mining | Black Rock vs. Bluescope Steel | Black Rock vs. De Grey Mining |
| Australian Unity vs. COAST ENTERTAINMENT HOLDINGS | Australian Unity vs. Retail Food Group | Australian Unity vs. Southern Cross Media | Australian Unity vs. Sports Entertainment Group |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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