Correlation Between REGAL ASIAN and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both REGAL ASIAN and Australian Agricultural 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 REGAL ASIAN and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REGAL ASIAN INVESTMENTS and Australian Agricultural, you can compare the effects of market volatilities on REGAL ASIAN and Australian Agricultural 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 REGAL ASIAN with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of REGAL ASIAN and Australian Agricultural.
Diversification Opportunities for REGAL ASIAN and Australian Agricultural
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between REGAL and Australian is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding REGAL ASIAN INVESTMENTS and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and REGAL ASIAN 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 REGAL ASIAN INVESTMENTS are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of REGAL ASIAN i.e., REGAL ASIAN and Australian Agricultural go up and down completely randomly.
Pair Corralation between REGAL ASIAN and Australian Agricultural
Assuming the 90 days trading horizon REGAL ASIAN INVESTMENTS is expected to under-perform the Australian Agricultural. In addition to that, REGAL ASIAN is 1.41 times more volatile than Australian Agricultural. It trades about -0.06 of its total potential returns per unit of risk. Australian Agricultural is currently generating about -0.09 per unit of volatility. If you would invest 140.00 in Australian Agricultural on August 28, 2024 and sell it today you would lose (3.00) from holding Australian Agricultural or give up 2.14% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
REGAL ASIAN INVESTMENTS vs. Australian Agricultural
Performance |
| Timeline |
| REGAL ASIAN INVESTMENTS |
| Australian Agricultural |
REGAL ASIAN and Australian Agricultural Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REGAL ASIAN and Australian Agricultural
The main advantage of trading using opposite REGAL ASIAN and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REGAL ASIAN position performs unexpectedly, Australian Agricultural 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 Agricultural will offset losses from the drop in Australian Agricultural's long position.| REGAL ASIAN vs. ABACUS STORAGE KING | REGAL ASIAN vs. Odyssey Energy | REGAL ASIAN vs. Hotel Property Investments | REGAL ASIAN vs. Origin Energy |
| Australian Agricultural vs. Macquarie Technology Group | Australian Agricultural vs. Fisher Paykel Healthcare | Australian Agricultural vs. Autosports Group | Australian Agricultural vs. Nufarm Finance NZ |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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