Correlation Between Embark Education and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Embark Education and Australian Strategic 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 Embark Education and Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Embark Education Group and Australian Strategic Materials, you can compare the effects of market volatilities on Embark Education and Australian Strategic 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 Embark Education with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Embark Education and Australian Strategic.
Diversification Opportunities for Embark Education and Australian Strategic
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Embark and Australian is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Embark Education Group and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Embark Education 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 Embark Education Group are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Embark Education i.e., Embark Education and Australian Strategic go up and down completely randomly.
Pair Corralation between Embark Education and Australian Strategic
Assuming the 90 days trading horizon Embark Education Group is expected to generate 0.49 times more return on investment than Australian Strategic. However, Embark Education Group is 2.02 times less risky than Australian Strategic. It trades about 0.12 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.06 per unit of risk. If you would invest 76.00 in Embark Education Group on November 25, 2024 and sell it today you would earn a total of 4.00 from holding Embark Education Group or generate 5.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Embark Education Group vs. Australian Strategic Materials
Performance |
Timeline |
Embark Education |
Australian Strategic |
Embark Education and Australian Strategic Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Embark Education and Australian Strategic
The main advantage of trading using opposite Embark Education and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Embark Education position performs unexpectedly, Australian Strategic 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 Strategic will offset losses from the drop in Australian Strategic's long position.Embark Education vs. G8 Education | ||
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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