Correlation Between Commonwealth Bank and Appen
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Appen 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 Appen 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 Appen, you can compare the effects of market volatilities on Commonwealth Bank and Appen 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 Appen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Appen.
Diversification Opportunities for Commonwealth Bank and Appen
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Commonwealth and Appen is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Appen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Appen 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 Appen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Appen has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Appen go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Appen
Assuming the 90 days trading horizon Commonwealth Bank of is expected to under-perform the Appen. But the stock apears to be less risky and, when comparing its historical volatility, Commonwealth Bank of is 25.96 times less risky than Appen. The stock trades about 0.0 of its potential returns per unit of risk. The Appen is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 201.00 in Appen on September 1, 2024 and sell it today you would earn a total of 37.00 from holding Appen or generate 18.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Appen
Performance |
| Timeline |
| Commonwealth Bank |
| Appen |
Commonwealth Bank and Appen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Appen
The main advantage of trading using opposite Commonwealth Bank and Appen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Appen 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 Appen will offset losses from the drop in Appen's long position.| Commonwealth Bank vs. Carawine Resources Limited | Commonwealth Bank vs. Bailador Technology Invest | Commonwealth Bank vs. Macquarie Technology Group | Commonwealth Bank vs. EVE Health Group |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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