Correlation Between AURUBIS AG and AUSNUTRIA DAIRY

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

By analyzing existing cross correlation between AURUBIS AG UNSPADR and AUSNUTRIA DAIRY, you can compare the effects of market volatilities on AURUBIS AG and AUSNUTRIA DAIRY 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 AURUBIS AG with a short position of AUSNUTRIA DAIRY. Check out your portfolio center. Please also check ongoing floating volatility patterns of AURUBIS AG and AUSNUTRIA DAIRY.

Diversification Opportunities for AURUBIS AG and AUSNUTRIA DAIRY

-0.34

Correlation Coefficient

AURUBIS AG  AUSNUTRIA DAIRY

Very good diversification

The 3 months correlation between AURUBIS and AUSNUTRIA is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding AURUBIS AG UNSPADR and AUSNUTRIA DAIRY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AUSNUTRIA DAIRY and AURUBIS AG 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 AURUBIS AG UNSPADR are associated (or correlated) with AUSNUTRIA DAIRY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AUSNUTRIA DAIRY has no effect on the direction of AURUBIS AG i.e., AURUBIS AG and AUSNUTRIA DAIRY go up and down completely randomly.

Pair Corralation between AURUBIS AG and AUSNUTRIA DAIRY

Assuming the 90 days trading horizon AURUBIS AG UNSPADR is expected to generate 0.75 times more return on investment than AUSNUTRIA DAIRY. However, AURUBIS AG UNSPADR is 1.34 times less risky than AUSNUTRIA DAIRY. It trades about 0.0 of its potential returns per unit of risk. AUSNUTRIA DAIRY is currently generating about -0.14 per unit of risk. If you would invest  3,660  in AURUBIS AG UNSPADR on September 27, 2024 and sell it today you would lose (20.00) from holding AURUBIS AG UNSPADR or give up 0.55% of portfolio value over 90 days.

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

AURUBIS AG UNSPADR  vs.  AUSNUTRIA DAIRY

AURUBIS AG UNSPADR

Risk-Adjusted Performance

8 of 100

OK

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

AUSNUTRIA DAIRY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in AUSNUTRIA DAIRY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, AUSNUTRIA DAIRY 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 AURUBIS AG and AUSNUTRIA DAIRY

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

The idea behind AURUBIS AG UNSPADR and AUSNUTRIA DAIRY 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.