Correlation Between Austral Gold and Alpine Banks

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

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

Diversification Opportunities for Austral Gold and Alpine Banks

-0.36

Correlation Coefficient

Austral Gold  Alpine Banks

Very good diversification

The 3 months correlation between Austral and Alpine is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and Alpine Banks of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpine Banks and Austral Gold 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 Austral Gold Limited are associated (or correlated) with Alpine Banks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpine Banks has no effect on the direction of Austral Gold i.e., Austral Gold and Alpine Banks go up and down completely randomly.

Pair Corralation between Austral Gold and Alpine Banks

Assuming the 90 days horizon Austral Gold Limited is expected to generate 63.04 times more return on investment than Alpine Banks. However, Austral Gold is 63.04 times more volatile than Alpine Banks of. It trades about 0.12 of its potential returns per unit of risk. Alpine Banks of is currently generating about 0.44 per unit of risk. If you would invest  2.06  in Austral Gold Limited on September 24, 2024 and sell it today you would earn a total of  0.26  from holding Austral Gold Limited or generate 12.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Austral Gold Limited  vs.  Alpine Banks of

Austral Gold Limited

Risk-Adjusted Performance

8 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile fundamental indicators, Austral Gold reported solid returns over the last few months and may actually be approaching a breakup point.

Alpine Banks

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alpine Banks of are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady forward indicators, Alpine Banks sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Austral Gold and Alpine Banks

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

The idea behind Austral Gold Limited and Alpine Banks of 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.