Correlation Between AUST AGRICULTURAL and HYDROFARM HLD

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

By analyzing existing cross correlation between AUST AGRICULTURAL and HYDROFARM HLD GRP, you can compare the effects of market volatilities on AUST AGRICULTURAL and HYDROFARM HLD 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 AUST AGRICULTURAL with a short position of HYDROFARM HLD. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and HYDROFARM HLD.

Diversification Opportunities for AUST AGRICULTURAL and HYDROFARM HLD

-0.05

Correlation Coefficient

AUST AGRICULTURAL  HYDROFARM HLD

Good diversification

The 3 months correlation between AUST and HYDROFARM is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and HYDROFARM HLD GRP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYDROFARM HLD GRP and AUST 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 AUST AGRICULTURAL are associated (or correlated) with HYDROFARM HLD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYDROFARM HLD GRP has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and HYDROFARM HLD go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and HYDROFARM HLD

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 276.3 times less return on investment than HYDROFARM HLD. But when comparing it to its historical volatility, AUST AGRICULTURAL is 85.27 times less risky than HYDROFARM HLD. It trades about 0.03 of its potential returns per unit of risk. HYDROFARM HLD GRP is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  575.00  in HYDROFARM HLD GRP on December 30, 2024 and sell it today you would lose (45.00) from holding HYDROFARM HLD GRP or give up 7.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

AUST AGRICULTURAL  vs.  HYDROFARM HLD GRP

AUST AGRICULTURAL

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AUST AGRICULTURAL are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, AUST AGRICULTURAL is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

HYDROFARM HLD GRP

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HYDROFARM HLD GRP are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, HYDROFARM HLD reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUST AGRICULTURAL and HYDROFARM HLD

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

The idea behind AUST AGRICULTURAL and HYDROFARM HLD GRP 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.