Correlation Between Australia and Hub24
Can any of the company-specific risk be diversified away by investing in both Australia and Hub24 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 Hub24 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 Hub24, you can compare the effects of market volatilities on Australia and Hub24 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 Hub24. Check out your portfolio center. Please also check ongoing floating volatility patterns of Australia and Hub24.
Diversification Opportunities for Australia and Hub24
Very weak diversification
The 3 months correlation between Australia and Hub24 is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Australia and New and Hub24 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hub24 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 Hub24. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hub24 has no effect on the direction of Australia i.e., Australia and Hub24 go up and down completely randomly.
Pair Corralation between Australia and Hub24
Assuming the 90 days trading horizon Australia and New is expected to under-perform the Hub24. But the stock apears to be less risky and, when comparing its historical volatility, Australia and New is 1.47 times less risky than Hub24. The stock trades about -0.07 of its potential returns per unit of risk. The Hub24 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 5,845 in Hub24 on September 24, 2024 and sell it today you would earn a total of 1,172 from holding Hub24 or generate 20.05% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 98.48% |
Values | Daily Returns |
Australia and New vs. Hub24
Performance |
Timeline |
Australia and New |
Hub24 |
Australia and Hub24 Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Australia and Hub24
The main advantage of trading using opposite Australia and Hub24 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Australia position performs unexpectedly, Hub24 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 Hub24 will offset losses from the drop in Hub24's long position.Australia vs. Aneka Tambang Tbk | Australia vs. BHP Group Limited | Australia vs. Commonwealth Bank | Australia vs. Commonwealth Bank of |
Hub24 vs. Aneka Tambang Tbk | Hub24 vs. Commonwealth Bank | Hub24 vs. Commonwealth Bank of | Hub24 vs. Australia and New |
Check out your portfolio center.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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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