Correlation Between G8 Education and Asara Resources
Can any of the company-specific risk be diversified away by investing in both G8 Education and Asara Resources 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 G8 Education and Asara Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between G8 Education and Asara Resources, you can compare the effects of market volatilities on G8 Education and Asara Resources 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 G8 Education with a short position of Asara Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of G8 Education and Asara Resources.
Diversification Opportunities for G8 Education and Asara Resources
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between GEM and Asara is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding G8 Education and Asara Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Asara Resources and G8 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 G8 Education are associated (or correlated) with Asara Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Asara Resources has no effect on the direction of G8 Education i.e., G8 Education and Asara Resources go up and down completely randomly.
Pair Corralation between G8 Education and Asara Resources
Assuming the 90 days trading horizon G8 Education is expected to generate 5.44 times less return on investment than Asara Resources. But when comparing it to its historical volatility, G8 Education is 4.61 times less risky than Asara Resources. It trades about 0.05 of its potential returns per unit of risk. Asara Resources is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 2.20 in Asara Resources on September 2, 2024 and sell it today you would earn a total of 0.10 from holding Asara Resources or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
G8 Education vs. Asara Resources
Performance |
| Timeline |
| G8 Education |
| Asara Resources |
G8 Education and Asara Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with G8 Education and Asara Resources
The main advantage of trading using opposite G8 Education and Asara Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if G8 Education position performs unexpectedly, Asara Resources 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 Asara Resources will offset losses from the drop in Asara Resources' long position.| G8 Education vs. ACDC Metals | G8 Education vs. Alto Metals | G8 Education vs. Leeuwin Metals | G8 Education vs. Stelar Metals |
| Asara Resources vs. Gtn | Asara Resources vs. Dynamic Drill And | Asara Resources vs. Iluka Resources | Asara Resources vs. Insignia Financial |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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