Correlation Between MOWI ASA and Australian Agricultural
Can any of the company-specific risk be diversified away by investing in both MOWI ASA and Australian Agricultural 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 MOWI ASA and Australian Agricultural into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MOWI ASA SPADR and Australian Agricultural, you can compare the effects of market volatilities on MOWI ASA and Australian Agricultural 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 MOWI ASA with a short position of Australian Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of MOWI ASA and Australian Agricultural.
Diversification Opportunities for MOWI ASA and Australian Agricultural
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between MOWI and Australian is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding MOWI ASA SPADR and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and MOWI ASA 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 MOWI ASA SPADR are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of MOWI ASA i.e., MOWI ASA and Australian Agricultural go up and down completely randomly.
Pair Corralation between MOWI ASA and Australian Agricultural
Assuming the 90 days trading horizon MOWI ASA is expected to generate 1.12 times less return on investment than Australian Agricultural. But when comparing it to its historical volatility, MOWI ASA SPADR is 1.23 times less risky than Australian Agricultural. It trades about 0.02 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 80.00 in Australian Agricultural on September 23, 2024 and sell it today you would earn a total of 3.00 from holding Australian Agricultural or generate 3.75% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
MOWI ASA SPADR vs. Australian Agricultural
Performance |
Timeline |
MOWI ASA SPADR |
Australian Agricultural |
MOWI ASA and Australian Agricultural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with MOWI ASA and Australian Agricultural
The main advantage of trading using opposite MOWI ASA and Australian Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MOWI ASA position performs unexpectedly, Australian Agricultural 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 Agricultural will offset losses from the drop in Australian Agricultural's long position.MOWI ASA vs. Archer Daniels Midland | MOWI ASA vs. Tyson Foods | MOWI ASA vs. Wilmar International Limited | MOWI ASA vs. Mowi ASA |
Australian Agricultural vs. Archer Daniels Midland | Australian Agricultural vs. Tyson Foods | Australian Agricultural vs. Wilmar International Limited | Australian Agricultural vs. MOWI ASA SPADR |
Check out your portfolio center.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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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