Correlation Between Australia and Ambertech

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

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

Diversification Opportunities for Australia and Ambertech

-0.2

Correlation Coefficient

Australia  Ambertech

Good diversification

The 3 months correlation between Australia and Ambertech is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Ambertech in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambertech and Australia 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 Australia and New are associated (or correlated) with Ambertech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambertech has no effect on the direction of Australia i.e., Australia and Ambertech go up and down completely randomly.

Pair Corralation between Australia and Ambertech

Assuming the 90 days trading horizon Australia and New is expected to generate 0.26 times more return on investment than Ambertech. However, Australia and New is 3.86 times less risky than Ambertech. It trades about 0.0 of its potential returns per unit of risk. Ambertech is currently generating about -0.04 per unit of risk. If you would invest  2,962  in Australia and New on October 11, 2024 and sell it today you would lose (10.00) from holding Australia and New or give up 0.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Australia and New  vs.  Ambertech

Australia and New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australia and New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Ambertech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ambertech has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Australia and Ambertech

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

The idea behind Australia and New and Ambertech 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.