Correlation Between Ampol and Coles

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

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

Diversification Opportunities for Ampol and Coles

-0.22

Correlation Coefficient

Ampol  Coles

Very good diversification

The 3 months correlation between Ampol and Coles is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Ampol and Coles Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coles Group and Ampol 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 Ampol are associated (or correlated) with Coles. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coles Group has no effect on the direction of Ampol i.e., Ampol and Coles go up and down completely randomly.

Pair Corralation between Ampol and Coles

Assuming the 90 days trading horizon Ampol is expected to under-perform the Coles. In addition to that, Ampol is 1.4 times more volatile than Coles Group. It trades about -0.14 of its total potential returns per unit of risk. Coles Group is currently generating about 0.1 per unit of volatility. If you would invest  1,851  in Coles Group on December 29, 2024 and sell it today you would earn a total of  119.00  from holding Coles Group or generate 6.43% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Ampol  vs.  Coles Group

Ampol

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ampol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Coles Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain essential indicators, Coles may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Ampol and Coles

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

The idea behind Ampol and Coles 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.