Correlation Between Cooper Metals and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both Cooper Metals and Australian Agricultural 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 Cooper Metals and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cooper Metals and Australian Agricultural, you can compare the effects of market volatilities on Cooper Metals and Australian Agricultural 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 Cooper Metals with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cooper Metals and Australian Agricultural.
Diversification Opportunities for Cooper Metals and Australian Agricultural
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cooper and Australian is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cooper Metals and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Cooper Metals 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 Cooper Metals are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Cooper Metals i.e., Cooper Metals and Australian Agricultural go up and down completely randomly.
Pair Corralation between Cooper Metals and Australian Agricultural
Assuming the 90 days trading horizon Cooper Metals is expected to under-perform the Australian Agricultural. In addition to that, Cooper Metals is 4.32 times more volatile than Australian Agricultural. It trades about -0.01 of its total potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of volatility. If you would invest 175.00 in Australian Agricultural on September 3, 2024 and sell it today you would lose (38.00) from holding Australian Agricultural or give up 21.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cooper Metals vs. Australian Agricultural
Performance |
| Timeline |
| Cooper Metals |
| Australian Agricultural |
Cooper Metals and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cooper Metals and Australian Agricultural
The main advantage of trading using opposite Cooper Metals and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cooper Metals position performs unexpectedly, Australian Agricultural 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 Agricultural will offset losses from the drop in Australian Agricultural's long position.| Cooper Metals vs. Richmond Vanadium Technology | Cooper Metals vs. Metro Mining | Cooper Metals vs. Ras Technology Holdings | Cooper Metals vs. Dug Technology |
| Australian Agricultural vs. Cooper Metals | Australian Agricultural vs. OD6 Metals | Australian Agricultural vs. SportsHero | Australian Agricultural 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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