Correlation Between Commonwealth Bank and Hansen Technologies
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Hansen 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 Commonwealth Bank and Hansen Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Hansen Technologies, you can compare the effects of market volatilities on Commonwealth Bank and Hansen 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 Commonwealth Bank with a short position of Hansen Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Hansen Technologies.
Diversification Opportunities for Commonwealth Bank and Hansen Technologies
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and Hansen is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Hansen Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansen Technologies and Commonwealth Bank 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 Commonwealth Bank are associated (or correlated) with Hansen Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansen Technologies has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Hansen Technologies go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Hansen Technologies
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 1.79 times less return on investment than Hansen Technologies. But when comparing it to its historical volatility, Commonwealth Bank is 1.24 times less risky than Hansen Technologies. It trades about 0.33 of its potential returns per unit of risk. Hansen Technologies is currently generating about 0.48 of returns per unit of risk over similar time horizon. If you would invest 490.00 in Hansen Technologies on September 4, 2024 and sell it today you would earn a total of 83.00 from holding Hansen Technologies or generate 16.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Commonwealth Bank vs. Hansen Technologies
Performance |
| Timeline |
| Commonwealth Bank |
| Hansen Technologies |
Commonwealth Bank and Hansen Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Hansen Technologies
The main advantage of trading using opposite Commonwealth Bank and Hansen Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Hansen 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 Hansen Technologies will offset losses from the drop in Hansen Technologies' long position.| Commonwealth Bank vs. Centaurus Metals | Commonwealth Bank vs. Pinnacle Investment Management | Commonwealth Bank vs. MFF Capital Investments | Commonwealth Bank vs. Steamships Trading |
| Hansen Technologies vs. Aneka Tambang Tbk | Hansen Technologies vs. BHP Group Limited | Hansen Technologies vs. Commonwealth Bank of | Hansen Technologies vs. Commonwealth Bank of |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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