Correlation Between Australis Capital and Body

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

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

Diversification Opportunities for Australis Capital and Body

0.18

Correlation Coefficient

Australis Capital  Body

Average diversification

The 3 months correlation between Australis and Body is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Australis Capital and Body and Mind in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Body and Mind and Australis Capital 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 Australis Capital are associated (or correlated) with Body. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Body and Mind has no effect on the direction of Australis Capital i.e., Australis Capital and Body go up and down completely randomly.

Pair Corralation between Australis Capital and Body

Assuming the 90 days horizon Australis Capital is expected to generate 0.73 times more return on investment than Body. However, Australis Capital is 1.36 times less risky than Body. It trades about 0.22 of its potential returns per unit of risk. Body and Mind is currently generating about 0.14 per unit of risk. If you would invest  0.01  in Australis Capital on October 4, 2024 and sell it today you would earn a total of  0.01  from holding Australis Capital or generate 100.0% return on investment over 90 days.

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

Australis Capital  vs.  Body and Mind

Australis Capital

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australis Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly sluggish basic indicators, Australis Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Body and Mind

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Body and Mind are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively fragile primary indicators, Body revealed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Australis Capital and Body

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

The idea behind Australis Capital and Body and Mind 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.