Correlation Between Gold Road and Australian Dairy
Can any of the company-specific risk be diversified away by investing in both Gold Road and Australian Dairy 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 Gold Road and Australian Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gold Road Resources and Australian Dairy Farms, you can compare the effects of market volatilities on Gold Road and Australian Dairy 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 Gold Road with a short position of Australian Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gold Road and Australian Dairy.
Diversification Opportunities for Gold Road and Australian Dairy
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Gold and Australian is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Gold Road Resources and Australian Dairy Farms in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Dairy Farms and Gold Road 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 Gold Road Resources are associated (or correlated) with Australian Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Dairy Farms has no effect on the direction of Gold Road i.e., Gold Road and Australian Dairy go up and down completely randomly.
Pair Corralation between Gold Road and Australian Dairy
Assuming the 90 days trading horizon Gold Road is expected to generate 3.72 times less return on investment than Australian Dairy. But when comparing it to its historical volatility, Gold Road Resources is 4.66 times less risky than Australian Dairy. It trades about 0.34 of its potential returns per unit of risk. Australian Dairy Farms is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 2.90 in Australian Dairy Farms on October 28, 2024 and sell it today you would earn a total of 4.10 from holding Australian Dairy Farms or generate 141.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gold Road Resources vs. Australian Dairy Farms
Performance |
| Timeline |
| Gold Road Resources |
| Australian Dairy Farms |
Gold Road and Australian Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gold Road and Australian Dairy
The main advantage of trading using opposite Gold Road and Australian Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gold Road position performs unexpectedly, Australian Dairy 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 Dairy will offset losses from the drop in Australian Dairy's long position.| Gold Road vs. Epsilon Healthcare | Gold Road vs. Australian Unity Office | Gold Road vs. Oneview Healthcare PLC | Gold Road vs. EVE Health Group |
| Australian Dairy vs. Hotel Property Investments | Australian Dairy vs. Red Hill Iron | Australian Dairy vs. ABACUS STORAGE KING | Australian Dairy vs. Vulcan Steel |
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.
Other Complementary Tools
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios |