Correlation Between AUST AGRICULTURAL and PICKN PAY

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

By analyzing existing cross correlation between AUST AGRICULTURAL and PICKN PAY STORES, you can compare the effects of market volatilities on AUST AGRICULTURAL and PICKN PAY 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 PICKN PAY. Check out your portfolio center. Please also check ongoing floating volatility patterns of AUST AGRICULTURAL and PICKN PAY.

Diversification Opportunities for AUST AGRICULTURAL and PICKN PAY

-0.51

Correlation Coefficient

AUST AGRICULTURAL  PICKN PAY

Excellent diversification

The 3 months correlation between AUST and PICKN is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and PICKN PAY STORES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PICKN PAY STORES 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 PICKN PAY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PICKN PAY STORES has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and PICKN PAY go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and PICKN PAY

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 0.56 times more return on investment than PICKN PAY. However, AUST AGRICULTURAL is 1.79 times less risky than PICKN PAY. It trades about 0.14 of its potential returns per unit of risk. PICKN PAY STORES is currently generating about -0.08 per unit of risk. If you would invest  82.00  in AUST AGRICULTURAL on December 2, 2024 and sell it today you would earn a total of  6.00  from holding AUST AGRICULTURAL or generate 7.32% return on investment over 90 days.

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

AUST AGRICULTURAL  vs.  PICKN PAY STORES

AUST AGRICULTURAL

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AUST AGRICULTURAL are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, AUST AGRICULTURAL may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PICKN PAY STORES

Risk-Adjusted Performance

Very Weak

Over the last 90 days PICKN PAY STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with AUST AGRICULTURAL and PICKN PAY

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

The idea behind AUST AGRICULTURAL and PICKN PAY STORES 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.