Correlation Between Russell Australian and Betashares Asia

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Can any of the company-specific risk be diversified away by investing in both Russell Australian and Betashares Asia 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 Russell Australian and Betashares Asia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Russell Australian Government and Betashares Asia Technology, you can compare the effects of market volatilities on Russell Australian and Betashares Asia 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 Russell Australian with a short position of Betashares Asia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Russell Australian and Betashares Asia.

Diversification Opportunities for Russell Australian and Betashares Asia

RussellBetasharesDiversified AwayRussellBetasharesDiversified Away100%
-0.09
  Correlation Coefficient

Good diversification

The 3 months correlation between Russell and Betashares is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Russell Australian Government and Betashares Asia Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Betashares Asia Tech and Russell Australian 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 Russell Australian Government are associated (or correlated) with Betashares Asia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Betashares Asia Tech has no effect on the direction of Russell Australian i.e., Russell Australian and Betashares Asia go up and down completely randomly.

Pair Corralation between Russell Australian and Betashares Asia

Assuming the 90 days trading horizon Russell Australian is expected to generate 11.1 times less return on investment than Betashares Asia. But when comparing it to its historical volatility, Russell Australian Government is 2.84 times less risky than Betashares Asia. It trades about 0.02 of its potential returns per unit of risk. Betashares Asia Technology is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  719.00  in Betashares Asia Technology on November 21, 2024 and sell it today you would earn a total of  430.00  from holding Betashares Asia Technology or generate 59.81% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Russell Australian Government  vs.  Betashares Asia Technology

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-50
JavaScript chart by amCharts 3.21.15RGB ASIA
       Timeline  
Russell Australian 

Risk-Adjusted Performance

Modest

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Russell Australian Government are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental drivers, Russell Australian is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb18.518.618.718.818.91919.1
Betashares Asia Tech 

Risk-Adjusted Performance

Solid

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Betashares Asia Technology are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Betashares Asia unveiled solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb9.51010.51111.5

Russell Australian and Betashares Asia Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-1.49-1.1-0.71-0.320.0064850.330.721.111.51.89 0.51.01.5
JavaScript chart by amCharts 3.21.15RGB ASIA
       Returns  

Pair Trading with Russell Australian and Betashares Asia

The main advantage of trading using opposite Russell Australian and Betashares Asia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Russell Australian position performs unexpectedly, Betashares Asia 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 Betashares Asia will offset losses from the drop in Betashares Asia's long position.
The idea behind Russell Australian Government and Betashares Asia Technology 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.

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