Correlation Between Commonwealth Bank and OOhMedia
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and OOhMedia 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 OOhMedia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Commonwealth Bank of and oOhMedia, you can compare the effects of market volatilities on Commonwealth Bank and OOhMedia 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 OOhMedia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and OOhMedia.
Diversification Opportunities for Commonwealth Bank and OOhMedia
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and OOhMedia is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and oOhMedia in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on oOhMedia 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 of are associated (or correlated) with OOhMedia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of oOhMedia has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and OOhMedia go up and down completely randomly.
Pair Corralation between Commonwealth Bank and OOhMedia
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 5.85 times less return on investment than OOhMedia. But when comparing it to its historical volatility, Commonwealth Bank of is 4.21 times less risky than OOhMedia. It trades about 0.08 of its potential returns per unit of risk. oOhMedia is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 119.00 in oOhMedia on August 27, 2024 and sell it today you would earn a total of 3.00 from holding oOhMedia or generate 2.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. oOhMedia
Performance |
| Timeline |
| Commonwealth Bank |
| oOhMedia |
Commonwealth Bank and OOhMedia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and OOhMedia
The main advantage of trading using opposite Commonwealth Bank and OOhMedia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, OOhMedia 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 OOhMedia will offset losses from the drop in OOhMedia's long position.| Commonwealth Bank vs. Ecofibre | Commonwealth Bank vs. iShares Global Healthcare | Commonwealth Bank vs. Ridley | Commonwealth Bank vs. Australian Dairy Farms |
| OOhMedia vs. Aneka Tambang Tbk | OOhMedia vs. Commonwealth Bank | OOhMedia vs. Commonwealth Bank of | OOhMedia vs. Australia and New |
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.
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