Correlation Between Austral Gold and BlackRock

Can any of the company-specific risk be diversified away by investing in both Austral Gold and BlackRock 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 BlackRock 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 BlackRock, you can compare the effects of market volatilities on Austral Gold and BlackRock 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 BlackRock. Check out your portfolio center. Please also check ongoing floating volatility patterns of Austral Gold and BlackRock.

Diversification Opportunities for Austral Gold and BlackRock

-0.52

Correlation Coefficient

Austral Gold  BlackRock

Excellent diversification

The 3 months correlation between Austral and BlackRock is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Austral Gold Limited and BlackRock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock 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 BlackRock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock has no effect on the direction of Austral Gold i.e., Austral Gold and BlackRock go up and down completely randomly.

Pair Corralation between Austral Gold and BlackRock

Assuming the 90 days horizon Austral Gold Limited is expected to generate 31.95 times more return on investment than BlackRock. However, Austral Gold is 31.95 times more volatile than BlackRock. It trades about 0.15 of its potential returns per unit of risk. BlackRock is currently generating about 0.14 per unit of risk. If you would invest  1.50  in Austral Gold Limited on September 23, 2024 and sell it today you would earn a total of  0.82  from holding Austral Gold Limited or generate 54.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Austral Gold Limited  vs.  BlackRock

Austral Gold Limited

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Austral Gold Limited are ranked lower than 12 (%) 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.

BlackRock

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BlackRock are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak essential indicators, BlackRock may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Austral Gold and BlackRock

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

The idea behind Austral Gold Limited and BlackRock 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.