Correlation Between Australian Agricultural and SOLSTAD OFFSHORE

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

By analyzing existing cross correlation between Australian Agricultural and SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on Australian Agricultural and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Agricultural and SOLSTAD OFFSHORE.

Diversification Opportunities for Australian Agricultural and SOLSTAD OFFSHORE

-0.73

Correlation Coefficient

Australian Agricultural  SOLSTAD OFFSHORE

Pay attention - limited upside

The 3 months correlation between Australian and SOLSTAD is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Australian Agricultural and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of Australian Agricultural i.e., Australian Agricultural and SOLSTAD OFFSHORE go up and down completely randomly.

Pair Corralation between Australian Agricultural and SOLSTAD OFFSHORE

Assuming the 90 days horizon Australian Agricultural is expected to generate 0.65 times more return on investment than SOLSTAD OFFSHORE. However, Australian Agricultural is 1.53 times less risky than SOLSTAD OFFSHORE. It trades about 0.05 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about -0.02 per unit of risk. If you would invest  82.00  in Australian Agricultural on December 24, 2024 and sell it today you would earn a total of  3.00  from holding Australian Agricultural or generate 3.66% return on investment over 90 days.

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

Australian Agricultural  vs.  SOLSTAD OFFSHORE NK

Australian Agricultural

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Agricultural are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Australian Agricultural is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SOLSTAD OFFSHORE

Risk-Adjusted Performance

Very Weak

Over the last 90 days SOLSTAD OFFSHORE NK has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SOLSTAD OFFSHORE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Australian Agricultural and SOLSTAD OFFSHORE

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

The idea behind Australian Agricultural and SOLSTAD OFFSHORE NK 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.