Correlation Between Commonwealth Bank and Harvest Technology
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Harvest Technology 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 Harvest Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank and Harvest Technology Group, you can compare the effects of market volatilities on Commonwealth Bank and Harvest Technology 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 Harvest Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Harvest Technology.
Diversification Opportunities for Commonwealth Bank and Harvest Technology
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and Harvest is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Harvest Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harvest Technology 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 Harvest Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harvest Technology has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Harvest Technology go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Harvest Technology
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 3.2 times less return on investment than Harvest Technology. But when comparing it to its historical volatility, Commonwealth Bank is 7.87 times less risky than Harvest Technology. It trades about 0.16 of its potential returns per unit of risk. Harvest Technology Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1.70 in Harvest Technology Group on September 4, 2024 and sell it today you would earn a total of 1.10 from holding Harvest Technology Group or generate 64.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank vs. Harvest Technology Group
Performance |
| Timeline |
| Commonwealth Bank |
| Harvest Technology |
Commonwealth Bank and Harvest Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Harvest Technology
The main advantage of trading using opposite Commonwealth Bank and Harvest Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Harvest Technology 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 Harvest Technology will offset losses from the drop in Harvest Technology's long position.| Commonwealth Bank vs. Centaurus Metals | Commonwealth Bank vs. Pinnacle Investment Management | Commonwealth Bank vs. MFF Capital Investments | Commonwealth Bank vs. Steamships Trading |
| Harvest Technology vs. Aneka Tambang Tbk | Harvest Technology vs. BHP Group Limited | Harvest Technology vs. Commonwealth Bank of | Harvest Technology 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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