Correlation Between Austral Gold and 62886HAP6

Can any of the company-specific risk be diversified away by investing in both Austral Gold and 62886HAP6 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 62886HAP6 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 NCL 3625, you can compare the effects of market volatilities on Austral Gold and 62886HAP6 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 62886HAP6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and 62886HAP6.

Diversification Opportunities for Austral Gold and 62886HAP6

-0.09

Correlation Coefficient

Austral Gold  62886HAP6

Good diversification

The 3 months correlation between Austral and 62886HAP6 is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and NCL 3625 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 62886HAP6 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 62886HAP6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 62886HAP6 has no effect on the direction of Austral Gold i.e., Austral Gold and 62886HAP6 go up and down completely randomly.

Pair Corralation between Austral Gold and 62886HAP6

Assuming the 90 days horizon Austral Gold is expected to generate 4.45 times less return on investment than 62886HAP6. But when comparing it to its historical volatility, Austral Gold Limited is 4.13 times less risky than 62886HAP6. It trades about 0.09 of its potential returns per unit of risk. NCL 3625 is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  9,150  in NCL 3625 on October 13, 2024 and sell it today you would earn a total of  300.00  from holding NCL 3625 or generate 3.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.3%
Values	Daily Returns

Austral Gold Limited  vs.  NCL 3625

Austral Gold Limited

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Austral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

62886HAP6

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NCL 3625 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for NCL 3625 investors.

Pair Trading with Austral Gold and 62886HAP6

The main advantage of trading using opposite Austral Gold and 62886HAP6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Austral Gold position performs unexpectedly, 62886HAP6 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 62886HAP6 will offset losses from the drop in 62886HAP6's long position.

The idea behind Austral Gold Limited and NCL 3625 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.