Correlation Between DY6 Metals and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both DY6 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 DY6 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 DY6 Metals and Australian Agricultural, you can compare the effects of market volatilities on DY6 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 DY6 Metals with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of DY6 Metals and Australian Agricultural.
Diversification Opportunities for DY6 Metals and Australian Agricultural
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between DY6 and Australian is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding DY6 Metals and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and DY6 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 DY6 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 DY6 Metals i.e., DY6 Metals and Australian Agricultural go up and down completely randomly.
Pair Corralation between DY6 Metals and Australian Agricultural
Assuming the 90 days trading horizon DY6 Metals is expected to generate 10.29 times more return on investment than Australian Agricultural. However, DY6 Metals is 10.29 times more volatile than Australian Agricultural. It trades about 0.01 of its potential returns per unit of risk. Australian Agricultural is currently generating about -0.02 per unit of risk. If you would invest 24.00 in DY6 Metals on October 31, 2024 and sell it today you would lose (20.40) from holding DY6 Metals or give up 85.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 77.31% |
| Values | Daily Returns |
DY6 Metals vs. Australian Agricultural
Performance |
| Timeline |
| DY6 Metals |
| Australian Agricultural |
DY6 Metals and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DY6 Metals and Australian Agricultural
The main advantage of trading using opposite DY6 Metals and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DY6 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.| DY6 Metals vs. Northern Star Resources | DY6 Metals vs. Evolution Mining | DY6 Metals vs. Bluescope Steel | DY6 Metals vs. De Grey Mining |
| Australian Agricultural vs. Pure Foods Tasmania | Australian Agricultural vs. Dug Technology | Australian Agricultural vs. ACDC Metals | Australian Agricultural vs. Aurelia Metals |
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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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