Correlation Between Austral Gold and Daiwa Securities

Can any of the company-specific risk be diversified away by investing in both Austral Gold and Daiwa Securities 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 Austral Gold and Daiwa Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Austral Gold Limited and Daiwa Securities Group, you can compare the effects of market volatilities on Austral Gold and Daiwa Securities 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 Austral Gold with a short position of Daiwa Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and Daiwa Securities.

Diversification Opportunities for Austral Gold and Daiwa Securities

-0.33

Correlation Coefficient

Austral Gold  Daiwa Securities

Very good diversification

The 3 months correlation between Austral and Daiwa is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and Daiwa Securities Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Daiwa Securities and Austral Gold 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 Austral Gold Limited are associated (or correlated) with Daiwa Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Daiwa Securities has no effect on the direction of Austral Gold i.e., Austral Gold and Daiwa Securities go up and down completely randomly.

Pair Corralation between Austral Gold and Daiwa Securities

Assuming the 90 days horizon Austral Gold Limited is expected to generate 11.84 times more return on investment than Daiwa Securities. However, Austral Gold is 11.84 times more volatile than Daiwa Securities Group. It trades about 0.09 of its potential returns per unit of risk. Daiwa Securities Group is currently generating about -0.27 per unit of risk. If you would invest  2.06  in Austral Gold Limited on September 26, 2024 and sell it today you would lose (0.10) from holding Austral Gold Limited or give up 4.85% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Austral Gold Limited  vs.  Daiwa Securities Group

Austral Gold Limited

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating fundamental indicators, Austral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Daiwa Securities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Daiwa Securities Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable fundamental indicators, Daiwa Securities is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Austral Gold and Daiwa Securities

The main advantage of trading using opposite Austral Gold and Daiwa Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, Daiwa Securities 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 Daiwa Securities will offset losses from the drop in Daiwa Securities' long position.

The idea behind Austral Gold Limited and Daiwa Securities Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.