Correlation Between Australian Strategic and Mystate

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

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

Diversification Opportunities for Australian Strategic and Mystate

-0.67

Correlation Coefficient

Australian Strategic  Mystate

Excellent diversification

The 3 months correlation between Australian and Mystate is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Australian Strategic Materials and Mystate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mystate and Australian Strategic 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 Strategic Materials are associated (or correlated) with Mystate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mystate has no effect on the direction of Australian Strategic i.e., Australian Strategic and Mystate go up and down completely randomly.

Pair Corralation between Australian Strategic and Mystate

Assuming the 90 days trading horizon Australian Strategic is expected to generate 13.26 times less return on investment than Mystate. In addition to that, Australian Strategic is 1.91 times more volatile than Mystate. It trades about 0.01 of its total potential returns per unit of risk. Mystate is currently generating about 0.32 per unit of volatility. If you would invest  405.00  in Mystate on October 11, 2024 and sell it today you would earn a total of  36.00  from holding Mystate or generate 8.89% return on investment over 90 days.

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

Australian Strategic Materials  vs.  Mystate

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Strategic Materials 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 primary 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.

Mystate

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mystate are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Mystate unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Australian Strategic and Mystate

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

The idea behind Australian Strategic Materials and Mystate 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 Transaction History module to view history of all your transactions and understand their impact on performance.