Correlation Between Leeuwin Metals and Ampol

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

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

Diversification Opportunities for Leeuwin Metals and Ampol

0.47

Correlation Coefficient

Leeuwin Metals  Ampol

Very weak diversification

The 3 months correlation between Leeuwin and Ampol is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Leeuwin Metals and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and Leeuwin Metals 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 Leeuwin Metals are associated (or correlated) with Ampol. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ampol has no effect on the direction of Leeuwin Metals i.e., Leeuwin Metals and Ampol go up and down completely randomly.

Pair Corralation between Leeuwin Metals and Ampol

Assuming the 90 days trading horizon Leeuwin Metals is expected to under-perform the Ampol. In addition to that, Leeuwin Metals is 1.79 times more volatile than Ampol. It trades about -0.19 of its total potential returns per unit of risk. Ampol is currently generating about -0.03 per unit of volatility. If you would invest  2,911  in Ampol on September 12, 2024 and sell it today you would lose (111.00) from holding Ampol or give up 3.81% of portfolio value over 90 days.

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

Leeuwin Metals  vs.  Ampol

Leeuwin Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Leeuwin Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Ampol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ampol has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Ampol 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 Leeuwin Metals and Ampol

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

The idea behind Leeuwin Metals and Ampol 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.