Correlation Between Group 6 and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Group 6 and Australian Unity 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 Group 6 and Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Group 6 Metals and Australian Unity Office, you can compare the effects of market volatilities on Group 6 and Australian Unity 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 Group 6 with a short position of Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Group 6 and Australian Unity.
Diversification Opportunities for Group 6 and Australian Unity
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Group and Australian is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Group 6 Metals and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office and Group 6 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 Group 6 Metals are associated (or correlated) with Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Group 6 i.e., Group 6 and Australian Unity go up and down completely randomly.
Pair Corralation between Group 6 and Australian Unity
If you would invest 2.50 in Group 6 Metals on August 29, 2024 and sell it today you would earn a total of 0.00 from holding Group 6 Metals or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Group 6 Metals vs. Australian Unity Office
Performance |
| Timeline |
| Group 6 Metals |
| Australian Unity Office |
Group 6 and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Group 6 and Australian Unity
The main advantage of trading using opposite Group 6 and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Group 6 position performs unexpectedly, Australian Unity 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 Unity will offset losses from the drop in Australian Unity's long position.| Group 6 vs. Northern Star Resources | Group 6 vs. Evolution Mining | Group 6 vs. Bluescope Steel | Group 6 vs. Sandfire Resources NL |
| Australian Unity vs. Champion Iron | Australian Unity vs. Ridley | Australian Unity vs. Peel Mining | Australian Unity vs. Australian Dairy Farms |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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