Correlation Between K2 Asset and Aussie Broadband
Can any of the company-specific risk be diversified away by investing in both K2 Asset and Aussie Broadband 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 K2 Asset and Aussie Broadband into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between K2 Asset Management and Aussie Broadband, you can compare the effects of market volatilities on K2 Asset and Aussie Broadband 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 K2 Asset with a short position of Aussie Broadband. Check out your portfolio center. Please also check ongoing floating volatility patterns of K2 Asset and Aussie Broadband.
Diversification Opportunities for K2 Asset and Aussie Broadband
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between KAM and Aussie is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding K2 Asset Management and Aussie Broadband in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aussie Broadband and K2 Asset 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 K2 Asset Management are associated (or correlated) with Aussie Broadband. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aussie Broadband has no effect on the direction of K2 Asset i.e., K2 Asset and Aussie Broadband go up and down completely randomly.
Pair Corralation between K2 Asset and Aussie Broadband
Assuming the 90 days trading horizon K2 Asset Management is expected to generate 2.46 times more return on investment than Aussie Broadband. However, K2 Asset is 2.46 times more volatile than Aussie Broadband. It trades about 0.37 of its potential returns per unit of risk. Aussie Broadband is currently generating about 0.1 per unit of risk. If you would invest 5.00 in K2 Asset Management on September 1, 2024 and sell it today you would earn a total of 2.00 from holding K2 Asset Management or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
K2 Asset Management vs. Aussie Broadband
Performance |
| Timeline |
| K2 Asset Management |
| Aussie Broadband |
K2 Asset and Aussie Broadband Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with K2 Asset and Aussie Broadband
The main advantage of trading using opposite K2 Asset and Aussie Broadband positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if K2 Asset position performs unexpectedly, Aussie Broadband 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 Aussie Broadband will offset losses from the drop in Aussie Broadband's long position.| K2 Asset vs. WA1 Resources | K2 Asset vs. Predictive Discovery | K2 Asset vs. Cooper Metals | K2 Asset vs. OD6 Metals |
| Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. Westpac Banking | Aussie Broadband vs. National Australia Bank | Aussie Broadband vs. Commonwealth Bank of |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
Other Complementary Tools
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings |