Correlation Between Australian United and Computershare

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

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

Diversification Opportunities for Australian United and Computershare

-0.2

Correlation Coefficient

Australian United  Computershare

Good diversification

The 3 months correlation between Australian and Computershare is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Australian United Investment and Computershare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Computershare and Australian United 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 Australian United Investment are associated (or correlated) with Computershare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Computershare has no effect on the direction of Australian United i.e., Australian United and Computershare go up and down completely randomly.

Pair Corralation between Australian United and Computershare

Assuming the 90 days trading horizon Australian United is expected to generate 41.33 times less return on investment than Computershare. But when comparing it to its historical volatility, Australian United Investment is 1.09 times less risky than Computershare. It trades about 0.0 of its potential returns per unit of risk. Computershare is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,576  in Computershare on August 6, 2024 and sell it today you would earn a total of  46.00  from holding Computershare or generate 1.79% return on investment over 90 days.

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

Australian United Investment  vs.  Computershare

Australian United

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Australian United Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Australian United may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Computershare

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Computershare are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Computershare 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 Australian United and Computershare

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

The idea behind Australian United Investment and Computershare 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.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.