Correlation Between AUST AGRICULTURAL and Tokyu Construction

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

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

Diversification Opportunities for AUST AGRICULTURAL and Tokyu Construction

0.74

Correlation Coefficient

AUST AGRICULTURAL  Tokyu Construction

Poor diversification

The 3 months correlation between AUST and Tokyu is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Tokyu Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu Construction 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 Tokyu Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu Construction has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Tokyu Construction go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and Tokyu Construction

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to generate 2.09 times less return on investment than Tokyu Construction. In addition to that, AUST AGRICULTURAL is 1.09 times more volatile than Tokyu Construction Co. It trades about 0.08 of its total potential returns per unit of risk. Tokyu Construction Co is currently generating about 0.19 per unit of volatility. If you would invest  418.00  in Tokyu Construction Co on December 20, 2024 and sell it today you would earn a total of  58.00  from holding Tokyu Construction Co or generate 13.88% return on investment over 90 days.

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

AUST AGRICULTURAL  vs.  Tokyu Construction Co

AUST AGRICULTURAL

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in AUST AGRICULTURAL are ranked lower than 6 (%) 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.

Tokyu Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyu Construction Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tokyu Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUST AGRICULTURAL and Tokyu Construction

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

The idea behind AUST AGRICULTURAL and Tokyu Construction Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.