Correlation Between Coles and Accent Resources

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

By analyzing existing cross correlation between Coles Group and Accent Resources NL, you can compare the effects of market volatilities on Coles and Accent Resources 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 Coles with a short position of Accent Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coles and Accent Resources.

Diversification Opportunities for Coles and Accent Resources

0.0

Correlation Coefficient

Coles  Accent Resources

Pay attention - limited upside

The 3 months correlation between Coles and Accent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Coles Group and Accent Resources NL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accent Resources and Coles 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 Coles Group are associated (or correlated) with Accent Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accent Resources has no effect on the direction of Coles i.e., Coles and Accent Resources go up and down completely randomly.

Pair Corralation between Coles and Accent Resources

Assuming the 90 days trading horizon Coles Group is expected to generate 0.24 times more return on investment than Accent Resources. However, Coles Group is 4.24 times less risky than Accent Resources. It trades about 0.1 of its potential returns per unit of risk. Accent Resources NL is currently generating about -0.01 per unit of risk. If you would invest  1,508  in Coles Group on October 3, 2024 and sell it today you would earn a total of  381.00  from holding Coles Group or generate 25.27% return on investment over 90 days.

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

Coles Group  vs.  Accent Resources NL

Coles Group

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Coles Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable essential indicators, Coles is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Accent Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accent Resources NL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Accent Resources is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Coles and Accent Resources

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

The idea behind Coles Group and Accent Resources NL 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.