Correlation Between Resource Base and Ampol
Can any of the company-specific risk be diversified away by investing in both Resource Base and Ampol 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 Resource Base and Ampol into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Resource Base and Ampol, you can compare the effects of market volatilities on Resource Base and Ampol 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 Resource Base with a short position of Ampol. Check out your portfolio center. Please also check ongoing floating volatility patterns of Resource Base and Ampol.
Diversification Opportunities for Resource Base and Ampol
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Resource and Ampol is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Resource Base and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and Resource Base 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 Resource Base are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol has no effect on the direction of Resource Base i.e., Resource Base and Ampol go up and down completely randomly.
Pair Corralation between Resource Base and Ampol
Assuming the 90 days trading horizon Resource Base is expected to generate 2.02 times more return on investment than Ampol. However, Resource Base is 2.02 times more volatile than Ampol. It trades about 0.17 of its potential returns per unit of risk. Ampol is currently generating about 0.12 per unit of risk. If you would invest 3.60 in Resource Base on September 1, 2024 and sell it today you would earn a total of 0.40 from holding Resource Base or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Resource Base vs. Ampol
Performance |
| Timeline |
| Resource Base |
| Ampol |
Resource Base and Ampol Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Resource Base and Ampol
The main advantage of trading using opposite Resource Base and Ampol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Resource Base position performs unexpectedly, Ampol 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 Ampol will offset losses from the drop in Ampol's long position.| Resource Base vs. Super Retail Group | Resource Base vs. Macquarie Bank Limited | Resource Base vs. Dexus Convenience Retail | Resource Base vs. Kkr Credit Income |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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