Correlation Between Australia and State Gas
Can any of the company-specific risk be diversified away by investing in both Australia and State Gas 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 State Gas 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 State Gas, you can compare the effects of market volatilities on Australia and State Gas 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 State Gas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australia and State Gas.
Diversification Opportunities for Australia and State Gas
Weak diversification
The 3 months correlation between Australia and State is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and State Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Gas 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 State Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Gas has no effect on the direction of Australia i.e., Australia and State Gas go up and down completely randomly.
Pair Corralation between Australia and State Gas
Assuming the 90 days trading horizon Australia and New is expected to generate 0.34 times more return on investment than State Gas. However, Australia and New is 2.91 times less risky than State Gas. It trades about 0.04 of its potential returns per unit of risk. State Gas is currently generating about -0.02 per unit of risk. If you would invest 2,877 in Australia and New on December 30, 2024 and sell it today you would earn a total of 87.00 from holding Australia and New or generate 3.02% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Australia and New vs. State Gas
Performance |
Timeline |
Australia and New |
State Gas |
Australia and State Gas Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australia and State Gas
The main advantage of trading using opposite Australia and State Gas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australia position performs unexpectedly, State Gas 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 State Gas will offset losses from the drop in State Gas' long position.Australia vs. Treasury Wine Estates | Australia vs. Retail Food Group | Australia vs. Platinum Asia Investments | Australia vs. Djerriwarrh Investments |
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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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