Correlation Between Australian Agricultural and Dole PLC

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

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

Diversification Opportunities for Australian Agricultural and Dole PLC

0.58

Correlation Coefficient

Australian Agricultural  Dole PLC

Very weak diversification

The 3 months correlation between Australian and Dole is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and Dole PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dole PLC and Australian Agricultural 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 Australian Agricultural are associated (or correlated) with Dole PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dole PLC has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and Dole PLC go up and down completely randomly.

Pair Corralation between Australian Agricultural and Dole PLC

Assuming the 90 days horizon Australian Agricultural is expected to generate 1.43 times more return on investment than Dole PLC. However, Australian Agricultural is 1.43 times more volatile than Dole PLC. It trades about 0.08 of its potential returns per unit of risk. Dole PLC is currently generating about 0.08 per unit of risk. If you would invest  86.00  in Australian Agricultural on December 30, 2024 and sell it today you would earn a total of  9.00  from holding Australian Agricultural or generate 10.47% return on investment over 90 days.

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

Australian Agricultural  vs.  Dole PLC

Australian Agricultural

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Agricultural are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Australian Agricultural may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Dole PLC

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Dole PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak essential indicators, Dole PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Australian Agricultural and Dole PLC

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

The idea behind Australian Agricultural and Dole PLC 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.