Correlation Between Mayfield Childcare and Australian Strategic

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

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

Diversification Opportunities for Mayfield Childcare and Australian Strategic

0.22

Correlation Coefficient

Mayfield Childcare  Australian Strategic

Modest diversification

The 3 months correlation between Mayfield and Australian is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Mayfield Childcare and Australian Strategic Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Strategic and Mayfield Childcare 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 Mayfield Childcare are associated (or correlated) with Australian Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Strategic has no effect on the direction of Mayfield Childcare i.e., Mayfield Childcare and Australian Strategic go up and down completely randomly.

Pair Corralation between Mayfield Childcare and Australian Strategic

Assuming the 90 days trading horizon Mayfield Childcare is expected to under-perform the Australian Strategic. But the stock apears to be less risky and, when comparing its historical volatility, Mayfield Childcare is 2.12 times less risky than Australian Strategic. The stock trades about -0.12 of its potential returns per unit of risk. The Australian Strategic Materials is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  86.00  in Australian Strategic Materials on October 10, 2024 and sell it today you would lose (34.00) from holding Australian Strategic Materials or give up 39.53% of portfolio value over 90 days.

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

Mayfield Childcare  vs.  Australian Strategic Materials

Mayfield Childcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mayfield Childcare 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 fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Australian Strategic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australian Strategic Materials has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Mayfield Childcare and Australian Strategic

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

The idea behind Mayfield Childcare and Australian Strategic Materials 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.