Correlation Between Woolworths and Aneka Tambang
Can any of the company-specific risk be diversified away by investing in both Woolworths and Aneka Tambang 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 Woolworths and Aneka Tambang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Woolworths and Aneka Tambang Tbk, you can compare the effects of market volatilities on Woolworths and Aneka Tambang 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 Woolworths with a short position of Aneka Tambang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Woolworths and Aneka Tambang.
Diversification Opportunities for Woolworths and Aneka Tambang
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Woolworths and Aneka is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Woolworths and Aneka Tambang Tbk in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aneka Tambang Tbk and Woolworths 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 Woolworths are associated (or correlated) with Aneka Tambang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aneka Tambang Tbk has no effect on the direction of Woolworths i.e., Woolworths and Aneka Tambang go up and down completely randomly.
Pair Corralation between Woolworths and Aneka Tambang
Assuming the 90 days trading horizon Woolworths is expected to generate 3.36 times more return on investment than Aneka Tambang. However, Woolworths is 3.36 times more volatile than Aneka Tambang Tbk. It trades about 0.51 of its potential returns per unit of risk. Aneka Tambang Tbk is currently generating about -0.22 per unit of risk. If you would invest 3,150 in Woolworths on April 2, 2024 and sell it today you would earn a total of 229.00 from holding Woolworths or generate 7.27% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Woolworths vs. Aneka Tambang Tbk
Performance |
Timeline |
Woolworths |
Aneka Tambang Tbk |
Woolworths and Aneka Tambang Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Woolworths and Aneka Tambang
The main advantage of trading using opposite Woolworths and Aneka Tambang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Woolworths position performs unexpectedly, Aneka Tambang 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 Aneka Tambang will offset losses from the drop in Aneka Tambang's long position.Woolworths vs. Westpac Banking | Woolworths vs. Champion Iron | Woolworths vs. Australian Dairy Farms | Woolworths vs. Perpetual Credit Income |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
Other Complementary Tools
USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
Commodity Channel Use Commodity Channel Index to analyze current equity momentum |