Correlation Between RLF AgTech and Future Generation
Can any of the company-specific risk be diversified away by investing in both RLF AgTech and Future Generation 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 RLF AgTech and Future Generation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RLF AgTech and Future Generation Australia, you can compare the effects of market volatilities on RLF AgTech and Future Generation 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 RLF AgTech with a short position of Future Generation. Check out your portfolio center. Please also check ongoing floating volatility patterns of RLF AgTech and Future Generation.
Diversification Opportunities for RLF AgTech and Future Generation
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between RLF and Future is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding RLF AgTech and Future Generation Australia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Future Generation and RLF AgTech 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 RLF AgTech are associated (or correlated) with Future Generation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Future Generation has no effect on the direction of RLF AgTech i.e., RLF AgTech and Future Generation go up and down completely randomly.
Pair Corralation between RLF AgTech and Future Generation
Assuming the 90 days trading horizon RLF AgTech is expected to under-perform the Future Generation. In addition to that, RLF AgTech is 4.33 times more volatile than Future Generation Australia. It trades about -0.03 of its total potential returns per unit of risk. Future Generation Australia is currently generating about 0.09 per unit of volatility. If you would invest 112.00 in Future Generation Australia on September 3, 2024 and sell it today you would earn a total of 17.00 from holding Future Generation Australia or generate 15.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
RLF AgTech vs. Future Generation Australia
Performance |
| Timeline |
| RLF AgTech |
| Future Generation |
RLF AgTech and Future Generation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RLF AgTech and Future Generation
The main advantage of trading using opposite RLF AgTech and Future Generation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RLF AgTech position performs unexpectedly, Future Generation 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 Future Generation will offset losses from the drop in Future Generation's long position.| RLF AgTech vs. Northern Star Resources | RLF AgTech vs. Evolution Mining | RLF AgTech vs. Bluescope Steel | RLF AgTech vs. Aneka Tambang Tbk |
| Future Generation vs. K2 Asset Management | Future Generation vs. Steamships Trading | Future Generation vs. Pinnacle Investment Management | Future Generation vs. A1 Investments Resources |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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