Correlation Between Flagship Investments and Austchina Holdings
Can any of the company-specific risk be diversified away by investing in both Flagship Investments and Austchina Holdings 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 Flagship Investments and Austchina Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Flagship Investments and Austchina Holdings, you can compare the effects of market volatilities on Flagship Investments and Austchina Holdings 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 Flagship Investments with a short position of Austchina Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Flagship Investments and Austchina Holdings.
Diversification Opportunities for Flagship Investments and Austchina Holdings
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Flagship and Austchina is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Flagship Investments and Austchina Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austchina Holdings and Flagship Investments 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 Flagship Investments are associated (or correlated) with Austchina Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austchina Holdings has no effect on the direction of Flagship Investments i.e., Flagship Investments and Austchina Holdings go up and down completely randomly.
Pair Corralation between Flagship Investments and Austchina Holdings
Assuming the 90 days trading horizon Flagship Investments is expected to generate 1.71 times less return on investment than Austchina Holdings. But when comparing it to its historical volatility, Flagship Investments is 9.1 times less risky than Austchina Holdings. It trades about 0.08 of its potential returns per unit of risk. Austchina Holdings is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Austchina Holdings on September 14, 2024 and sell it today you would lose (0.30) from holding Austchina Holdings or give up 75.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Flagship Investments vs. Austchina Holdings
Performance |
| Timeline |
| Flagship Investments |
| Austchina Holdings |
Flagship Investments and Austchina Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Flagship Investments and Austchina Holdings
The main advantage of trading using opposite Flagship Investments and Austchina Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Flagship Investments position performs unexpectedly, Austchina Holdings 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 Austchina Holdings will offset losses from the drop in Austchina Holdings' long position.| Flagship Investments vs. Australian Foundation Investment | Flagship Investments vs. MFF Capital Investments | Flagship Investments vs. Metrics Master Income | Flagship Investments vs. L1 Long Short |
| Austchina Holdings vs. Regal Investment | Austchina Holdings vs. Vulcan Steel | Austchina Holdings vs. Iron Road | Austchina Holdings vs. Australian United Investment |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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