Correlation Between Lithium Australia and Austco Healthcare
Can any of the company-specific risk be diversified away by investing in both Lithium Australia and Austco Healthcare 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 Lithium Australia and Austco Healthcare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lithium Australia NL and Austco Healthcare, you can compare the effects of market volatilities on Lithium Australia and Austco Healthcare 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 Lithium Australia with a short position of Austco Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lithium Australia and Austco Healthcare.
Diversification Opportunities for Lithium Australia and Austco Healthcare
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Lithium and Austco is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Lithium Australia NL and Austco Healthcare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austco Healthcare and Lithium Australia 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 Lithium Australia NL are associated (or correlated) with Austco Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austco Healthcare has no effect on the direction of Lithium Australia i.e., Lithium Australia and Austco Healthcare go up and down completely randomly.
Pair Corralation between Lithium Australia and Austco Healthcare
Assuming the 90 days trading horizon Lithium Australia NL is expected to under-perform the Austco Healthcare. In addition to that, Lithium Australia is 1.78 times more volatile than Austco Healthcare. It trades about -0.08 of its total potential returns per unit of risk. Austco Healthcare is currently generating about -0.07 per unit of volatility. If you would invest 32.00 in Austco Healthcare on November 29, 2024 and sell it today you would lose (2.00) from holding Austco Healthcare or give up 6.25% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lithium Australia NL vs. Austco Healthcare
Performance |
| Timeline |
| Lithium Australia |
| Austco Healthcare |
Lithium Australia and Austco Healthcare Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lithium Australia and Austco Healthcare
The main advantage of trading using opposite Lithium Australia and Austco Healthcare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lithium Australia position performs unexpectedly, Austco Healthcare 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 Austco Healthcare will offset losses from the drop in Austco Healthcare's long position.| Lithium Australia vs. Nufarm Finance NZ | Lithium Australia vs. MFF Capital Investments | Lithium Australia vs. Platinum Asset Management | Lithium Australia vs. Autosports Group |
| Austco Healthcare vs. Carlton Investments | Austco Healthcare vs. AiMedia Technologies | Austco Healthcare vs. Retail Food Group | Austco Healthcare vs. K2 Asset Management |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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