Correlation Between Qantas Airways and Ampol

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

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

Diversification Opportunities for Qantas Airways and Ampol

0.3

Correlation Coefficient

Qantas Airways  Ampol

Weak diversification

The 3 months correlation between Qantas and Ampol is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Qantas Airways and Ampol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ampol and Qantas Airways 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 Qantas Airways 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 Qantas Airways i.e., Qantas Airways and Ampol go up and down completely randomly.

Pair Corralation between Qantas Airways and Ampol

Assuming the 90 days trading horizon Qantas Airways is expected to generate 1.73 times less return on investment than Ampol. In addition to that, Qantas Airways is 1.48 times more volatile than Ampol. It trades about 0.12 of its total potential returns per unit of risk. Ampol is currently generating about 0.31 per unit of volatility. If you would invest  2,750  in Ampol on October 27, 2024 and sell it today you would earn a total of  198.00  from holding Ampol or generate 7.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Qantas Airways  vs.  Ampol

Qantas Airways

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Qantas Airways are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Qantas Airways unveiled solid returns over the last few months and may actually be approaching a breakup point.

Ampol

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ampol are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. 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 Qantas Airways and Ampol

The main advantage of trading using opposite Qantas Airways and Ampol positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Qantas Airways 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 Qantas Airways 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.