Correlation Between Australian United and Sims
Can any of the company-specific risk be diversified away by investing in both Australian United and Sims 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 United and Sims into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Australian United Investment and Sims, you can compare the effects of market volatilities on Australian United and Sims 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 United with a short position of Sims. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian United and Sims.
Diversification Opportunities for Australian United and Sims
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Australian and Sims is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Sims in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sims and Australian United 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 United Investment are associated (or correlated) with Sims. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sims has no effect on the direction of Australian United i.e., Australian United and Sims go up and down completely randomly.
Pair Corralation between Australian United and Sims
Assuming the 90 days trading horizon Australian United is expected to generate 93.74 times less return on investment than Sims. But when comparing it to its historical volatility, Australian United Investment is 1.82 times less risky than Sims. It trades about 0.0 of its potential returns per unit of risk. Sims is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,187 in Sims on December 30, 2024 and sell it today you would earn a total of 335.00 from holding Sims or generate 28.22% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Australian United Investment vs. Sims
Performance |
Timeline |
Australian United |
Sims |
Australian United and Sims Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australian United and Sims
The main advantage of trading using opposite Australian United and Sims positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australian United position performs unexpectedly, Sims 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 Sims will offset losses from the drop in Sims' long position.Australian United vs. National Australia Bank | Australian United vs. Black Rock Mining | Australian United vs. Aurelia Metals | Australian United vs. 29Metals |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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