Correlation Between Australian Oilseeds and CHS
Can any of the company-specific risk be diversified away by investing in both Australian Oilseeds and CHS 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 Oilseeds and CHS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Oilseeds Holdings and CHS Inc CL, you can compare the effects of market volatilities on Australian Oilseeds and CHS 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 Oilseeds with a short position of CHS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Oilseeds and CHS.
Diversification Opportunities for Australian Oilseeds and CHS
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and CHS is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Australian Oilseeds Holdings and CHS Inc CL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CHS Inc CL and Australian Oilseeds 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 Oilseeds Holdings are associated (or correlated) with CHS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CHS Inc CL has no effect on the direction of Australian Oilseeds i.e., Australian Oilseeds and CHS go up and down completely randomly.
Pair Corralation between Australian Oilseeds and CHS
Given the investment horizon of 90 days Australian Oilseeds Holdings is expected to generate 13.69 times more return on investment than CHS. However, Australian Oilseeds is 13.69 times more volatile than CHS Inc CL. It trades about 0.19 of its potential returns per unit of risk. CHS Inc CL is currently generating about -0.2 per unit of risk. If you would invest 77.00 in Australian Oilseeds Holdings on September 2, 2024 and sell it today you would earn a total of 18.00 from holding Australian Oilseeds Holdings or generate 23.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Australian Oilseeds Holdings vs. CHS Inc CL
Performance |
| Timeline |
| Australian Oilseeds |
| CHS Inc CL |
Australian Oilseeds and CHS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Australian Oilseeds and CHS
The main advantage of trading using opposite Australian Oilseeds and CHS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Oilseeds position performs unexpectedly, CHS 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 CHS will offset losses from the drop in CHS's long position.| Australian Oilseeds vs. Cimpress NV | Australian Oilseeds vs. Boston Omaha Corp | Australian Oilseeds vs. Xponential Fitness | Australian Oilseeds vs. WPP PLC ADR |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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