Correlation Between Australia and Genesis Resources

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

Diversification Opportunities for Australia and Genesis Resources

-0.11

Correlation Coefficient

Australia  Genesis Resources

Good diversification

The 3 months correlation between Australia and Genesis is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Genesis Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genesis Resources 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 Genesis Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genesis Resources has no effect on the direction of Australia i.e., Australia and Genesis Resources go up and down completely randomly.

Pair Corralation between Australia and Genesis Resources

Assuming the 90 days trading horizon Australia and New is expected to generate 0.13 times more return on investment than Genesis Resources. However, Australia and New is 7.61 times less risky than Genesis Resources. It trades about -0.04 of its potential returns per unit of risk. Genesis Resources is currently generating about -0.03 per unit of risk. If you would invest  3,045  in Australia and New on October 22, 2024 and sell it today you would lose (100.00) from holding Australia and New or give up 3.28% 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.  Genesis Resources

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.

Genesis Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Genesis Resources 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 basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Australia and Genesis Resources

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

The idea behind Australia and New and Genesis Resources 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.

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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.