Correlation Between Australian Oilseeds and FS KKR

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

By analyzing existing cross correlation between Australian Oilseeds Holdings and FS KKR Capital, you can compare the effects of market volatilities on Australian Oilseeds and FS KKR 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 Oilseeds with a short position of FS KKR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australian Oilseeds and FS KKR.

Diversification Opportunities for Australian Oilseeds and FS KKR

0.83

Correlation Coefficient

Australian Oilseeds  FS KKR

Very poor diversification

The 3 months correlation between Australian and FSK is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Australian Oilseeds Holdings and FS KKR Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FS KKR Capital and Australian Oilseeds 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 Oilseeds Holdings are associated (or correlated) with FS KKR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FS KKR Capital has no effect on the direction of Australian Oilseeds i.e., Australian Oilseeds and FS KKR go up and down completely randomly.

Pair Corralation between Australian Oilseeds and FS KKR

Given the investment horizon of 90 days Australian Oilseeds Holdings is expected to generate 10.08 times more return on investment than FS KKR. However, Australian Oilseeds is 10.08 times more volatile than FS KKR Capital. It trades about 0.15 of its potential returns per unit of risk. FS KKR Capital is currently generating about -0.02 per unit of risk. If you would invest  95.00  in Australian Oilseeds Holdings on October 11, 2024 and sell it today you would earn a total of  20.00  from holding Australian Oilseeds Holdings or generate 21.05% return on investment over 90 days.

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

Australian Oilseeds Holdings  vs.  FS KKR Capital

Australian Oilseeds

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Oilseeds Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Australian Oilseeds unveiled solid returns over the last few months and may actually be approaching a breakup point.

FS KKR Capital

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FS KKR Capital are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite unsteady basic indicators, FS KKR may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Australian Oilseeds and FS KKR

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

The idea behind Australian Oilseeds Holdings and FS KKR Capital 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.