Correlation Between Australian Agricultural and Finexia Financial
Can any of the company-specific risk be diversified away by investing in both Australian Agricultural and Finexia Financial 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 Finexia Financial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian Agricultural and Finexia Financial Group, you can compare the effects of market volatilities on Australian Agricultural and Finexia Financial 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 Finexia Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and Finexia Financial.
Diversification Opportunities for Australian Agricultural and Finexia Financial
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Finexia is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Finexia Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finexia Financial 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 Finexia Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finexia Financial has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Finexia Financial go up and down completely randomly.
Pair Corralation between Australian Agricultural and Finexia Financial
Assuming the 90 days trading horizon Australian Agricultural is expected to generate 0.34 times more return on investment than Finexia Financial. However, Australian Agricultural is 2.94 times less risky than Finexia Financial. It trades about 0.14 of its potential returns per unit of risk. Finexia Financial Group is currently generating about -0.16 per unit of risk. If you would invest 137.00 in Australian Agricultural on September 25, 2024 and sell it today you would earn a total of 4.00 from holding Australian Agricultural or generate 2.92% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 95.45% |
Values | Daily Returns |
Australian Agricultural vs. Finexia Financial Group
Performance |
Timeline |
Australian Agricultural |
Finexia Financial |
Australian Agricultural and Finexia Financial Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australian Agricultural and Finexia Financial
The main advantage of trading using opposite Australian Agricultural and Finexia Financial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian Agricultural position performs unexpectedly, Finexia Financial 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 Finexia Financial will offset losses from the drop in Finexia Financial's long position.Australian Agricultural vs. Talisman Mining | Australian Agricultural vs. Beston Global Food | Australian Agricultural vs. Peel Mining | Australian Agricultural vs. Computershare |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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