Correlation Between Leeuwin Metals and Australian United
Can any of the company-specific risk be diversified away by investing in both Leeuwin Metals and Australian United 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 Leeuwin Metals and Australian United into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Leeuwin Metals and Australian United Investment, you can compare the effects of market volatilities on Leeuwin Metals and Australian United 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 Leeuwin Metals with a short position of Australian United. Check out your portfolio center. Please also check ongoing floating volatility patterns of Leeuwin Metals and Australian United.
Diversification Opportunities for Leeuwin Metals and Australian United
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Leeuwin and Australian is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Leeuwin Metals and Australian United Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian United and Leeuwin Metals 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 Leeuwin Metals are associated (or correlated) with Australian United. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian United has no effect on the direction of Leeuwin Metals i.e., Leeuwin Metals and Australian United go up and down completely randomly.
Pair Corralation between Leeuwin Metals and Australian United
Assuming the 90 days trading horizon Leeuwin Metals is expected to under-perform the Australian United. In addition to that, Leeuwin Metals is 8.09 times more volatile than Australian United Investment. It trades about -0.03 of its total potential returns per unit of risk. Australian United Investment is currently generating about 0.05 per unit of volatility. If you would invest 899.00 in Australian United Investment on September 12, 2024 and sell it today you would earn a total of 174.00 from holding Australian United Investment or generate 19.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 86.75% |
| Values | Daily Returns |
Leeuwin Metals vs. Australian United Investment
Performance |
| Timeline |
| Leeuwin Metals |
| Australian United |
Leeuwin Metals and Australian United Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Leeuwin Metals and Australian United
The main advantage of trading using opposite Leeuwin Metals and Australian United positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Leeuwin Metals position performs unexpectedly, Australian United 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 United will offset losses from the drop in Australian United's long position.| Leeuwin Metals vs. Queste Communications | Leeuwin Metals vs. Skycity Entertainment Group | Leeuwin Metals vs. Dug Technology | Leeuwin Metals vs. Charter Hall Retail |
| Australian United vs. Aeon Metals | Australian United vs. Leeuwin Metals | Australian United vs. Red Hill Iron | Australian United vs. Aurelia Metals |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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