Correlation Between Global Health and Australian Strategic
Can any of the company-specific risk be diversified away by investing in both Global Health 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 Global Health and Australian Strategic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Australian Strategic Materials, you can compare the effects of market volatilities on Global Health 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 Global Health with a short position of Australian Strategic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Australian Strategic.
Diversification Opportunities for Global Health and Australian Strategic
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Global and Australian is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Global Health and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Global Health 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 Global Health 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 Global Health i.e., Global Health and Australian Strategic go up and down completely randomly.
Pair Corralation between Global Health and Australian Strategic
Assuming the 90 days trading horizon Global Health is expected to generate 1.03 times more return on investment than Australian Strategic. However, Global Health is 1.03 times more volatile than Australian Strategic Materials. It trades about 0.01 of its potential returns per unit of risk. Australian Strategic Materials is currently generating about -0.02 per unit of risk. If you would invest 20.00 in Global Health on October 14, 2024 and sell it today you would lose (6.00) from holding Global Health or give up 30.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Australian Strategic Materials
Performance |
| Timeline |
| Global Health |
| Australian Strategic |
Global Health and Australian Strategic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Australian Strategic
The main advantage of trading using opposite Global Health and Australian Strategic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health 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.| Global Health vs. ACDC Metals | Global Health vs. Lendlease Group | Global Health vs. Black Rock Mining | Global Health vs. Perseus Mining |
| Australian Strategic vs. Global Health | Australian Strategic vs. Mirrabooka Investments | Australian Strategic vs. Carlton Investments | Australian Strategic vs. Oneview Healthcare PLC |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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