Correlation Between Australian Agricultural and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Collins Foods 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 Australian Agricultural and Collins Foods into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Collins Foods, you can compare the effects of market volatilities on Australian Agricultural and Collins Foods 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 Australian Agricultural with a short position of Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Collins Foods.
Diversification Opportunities for Australian Agricultural and Collins Foods
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Australian and Collins is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Collins Foods go up and down completely randomly.
Pair Corralation between Australian Agricultural and Collins Foods
Assuming the 90 days trading horizon Australian Agricultural is expected to under-perform the Collins Foods. In addition to that, Australian Agricultural is 1.04 times more volatile than Collins Foods. It trades about -0.02 of its total potential returns per unit of risk. Collins Foods is currently generating about 0.14 per unit of volatility. If you would invest 772.00 in Collins Foods on September 1, 2024 and sell it today you would earn a total of 87.00 from holding Collins Foods or generate 11.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Australian Agricultural vs. Collins Foods
Performance |
Timeline |
Australian Agricultural |
Collins Foods |
Australian Agricultural and Collins Foods Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australian Agricultural and Collins Foods
The main advantage of trading using opposite Australian Agricultural and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.Australian Agricultural vs. Retail Food Group | Australian Agricultural vs. Spirit Telecom | Australian Agricultural vs. Credit Clear | Australian Agricultural vs. Wt Financial Group |
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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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