Correlation Between AUST AGRICULTURAL and Keysight Technologies

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

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

Diversification Opportunities for AUST AGRICULTURAL and Keysight Technologies

-0.04

Correlation Coefficient

AUST AGRICULTURAL  Keysight Technologies

Good diversification

The 3 months correlation between AUST and Keysight is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding AUST AGRICULTURAL and Keysight Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Keysight Technologies and AUST AGRICULTURAL 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 AUST AGRICULTURAL are associated (or correlated) with Keysight Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Keysight Technologies has no effect on the direction of AUST AGRICULTURAL i.e., AUST AGRICULTURAL and Keysight Technologies go up and down completely randomly.

Pair Corralation between AUST AGRICULTURAL and Keysight Technologies

Assuming the 90 days trading horizon AUST AGRICULTURAL is expected to under-perform the Keysight Technologies. But the stock apears to be less risky and, when comparing its historical volatility, AUST AGRICULTURAL is 1.45 times less risky than Keysight Technologies. The stock trades about -0.01 of its potential returns per unit of risk. The Keysight Technologies is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  12,118  in Keysight Technologies on April 23, 2025 and sell it today you would earn a total of  1,816  from holding Keysight Technologies or generate 14.99% return on investment over 90 days.

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

AUST AGRICULTURAL  vs.  Keysight Technologies

AUST AGRICULTURAL

Risk-Adjusted Performance

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.

Keysight Technologies

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Keysight Technologies are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Keysight Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AUST AGRICULTURAL and Keysight Technologies

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

The idea behind AUST AGRICULTURAL and Keysight Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.