Correlation Between EROAD and Austal
Can any of the company-specific risk be diversified away by investing in both EROAD and Austal 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 EROAD and Austal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EROAD and Austal, you can compare the effects of market volatilities on EROAD and Austal 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 EROAD with a short position of Austal. Check out your portfolio center. Please also check ongoing floating volatility patterns of EROAD and Austal.
Diversification Opportunities for EROAD and Austal
Excellent diversification
The 3 months correlation between EROAD and Austal is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding EROAD and Austal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austal and EROAD 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 EROAD are associated (or correlated) with Austal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austal has no effect on the direction of EROAD i.e., EROAD and Austal go up and down completely randomly.
Pair Corralation between EROAD and Austal
If you would invest 66.00 in EROAD on September 15, 2024 and sell it today you would earn a total of 19.00 from holding EROAD or generate 28.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
EROAD vs. Austal
Performance |
| Timeline |
| EROAD |
| Austal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
EROAD and Austal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EROAD and Austal
The main advantage of trading using opposite EROAD and Austal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EROAD position performs unexpectedly, Austal 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 Austal will offset losses from the drop in Austal's long position.The idea behind EROAD and Austal pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Austal vs. Auctus Alternative Investments | Austal vs. Hudson Investment Group | Austal vs. Retail Food Group | Austal vs. REGAL ASIAN INVESTMENTS |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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