Correlation Between ELECTRONIC ARTS and AUST AGRICULTURAL

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

By analyzing existing cross correlation between ELECTRONIC ARTS and AUST AGRICULTURAL, you can compare the effects of market volatilities on ELECTRONIC ARTS and AUST AGRICULTURAL 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 ELECTRONIC ARTS with a short position of AUST AGRICULTURAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELECTRONIC ARTS and AUST AGRICULTURAL.

Diversification Opportunities for ELECTRONIC ARTS and AUST AGRICULTURAL

-0.65

Correlation Coefficient

ELECTRONIC ARTS  AUST AGRICULTURAL

Excellent diversification

The 3 months correlation between ELECTRONIC and AUST is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding ELECTRONIC ARTS and AUST AGRICULTURAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUST AGRICULTURAL and ELECTRONIC ARTS 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 ELECTRONIC ARTS are associated (or correlated) with AUST AGRICULTURAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUST AGRICULTURAL has no effect on the direction of ELECTRONIC ARTS i.e., ELECTRONIC ARTS and AUST AGRICULTURAL go up and down completely randomly.

Pair Corralation between ELECTRONIC ARTS and AUST AGRICULTURAL

Assuming the 90 days trading horizon ELECTRONIC ARTS is expected to under-perform the AUST AGRICULTURAL. In addition to that, ELECTRONIC ARTS is 1.81 times more volatile than AUST AGRICULTURAL. It trades about -0.4 of its total potential returns per unit of risk. AUST AGRICULTURAL is currently generating about -0.08 per unit of volatility. If you would invest  83.00  in AUST AGRICULTURAL on September 26, 2024 and sell it today you would lose (1.00) from holding AUST AGRICULTURAL or give up 1.2% of portfolio value over 90 days.

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

ELECTRONIC ARTS  vs.  AUST AGRICULTURAL

ELECTRONIC ARTS

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in ELECTRONIC ARTS are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, ELECTRONIC ARTS may actually be approaching a critical reversion point that can send shares even higher in January 2025.

AUST AGRICULTURAL

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with ELECTRONIC ARTS and AUST AGRICULTURAL

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

The idea behind ELECTRONIC ARTS and AUST AGRICULTURAL 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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.