Correlation Between Dole PLC and Australian Oilseeds

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

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

Diversification Opportunities for Dole PLC and Australian Oilseeds

-0.44

Correlation Coefficient

Dole PLC  Australian Oilseeds

Very good diversification

The 3 months correlation between Dole and Australian is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Dole PLC and Australian Oilseeds Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Oilseeds and Dole PLC 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 Dole PLC are associated (or correlated) with Australian Oilseeds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Oilseeds has no effect on the direction of Dole PLC i.e., Dole PLC and Australian Oilseeds go up and down completely randomly.

Pair Corralation between Dole PLC and Australian Oilseeds

Given the investment horizon of 90 days Dole PLC is expected to under-perform the Australian Oilseeds. But the stock apears to be less risky and, when comparing its historical volatility, Dole PLC is 2.26 times less risky than Australian Oilseeds. The stock trades about -0.04 of its potential returns per unit of risk. The Australian Oilseeds Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  89.00  in Australian Oilseeds Holdings on September 4, 2024 and sell it today you would earn a total of  4.90  from holding Australian Oilseeds Holdings or generate 5.51% return on investment over 90 days.

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

Dole PLC  vs.  Australian Oilseeds Holdings

Dole PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Dole PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, Dole PLC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Australian Oilseeds

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Oilseeds Holdings are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Australian Oilseeds may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Dole PLC and Australian Oilseeds

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

The idea behind Dole PLC and Australian Oilseeds Holdings 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.