Correlation Between Australia and Bell Financial

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

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

Diversification Opportunities for Australia and Bell Financial

-0.43

Correlation Coefficient

Australia  Bell Financial

Very good diversification

The 3 months correlation between Australia and Bell is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Bell Financial Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bell Financial Group and Australia 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 Australia and New are associated (or correlated) with Bell Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bell Financial Group has no effect on the direction of Australia i.e., Australia and Bell Financial go up and down completely randomly.

Pair Corralation between Australia and Bell Financial

Assuming the 90 days trading horizon Australia and New is expected to under-perform the Bell Financial. But the stock apears to be less risky and, when comparing its historical volatility, Australia and New is 1.57 times less risky than Bell Financial. The stock trades about -0.12 of its potential returns per unit of risk. The Bell Financial Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  130.00  in Bell Financial Group on September 26, 2024 and sell it today you would earn a total of  3.00  from holding Bell Financial Group or generate 2.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Australia and New  vs.  Bell Financial Group

Australia and New

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Australia and New has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Australia is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Bell Financial Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bell Financial Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical and fundamental indicators, Bell Financial 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 Australia and Bell Financial

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

The idea behind Australia and New and Bell Financial Group 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.