Correlation Between Commonwealth Bank and Aumake
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Aumake 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 Aumake 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 Aumake, you can compare the effects of market volatilities on Commonwealth Bank and Aumake 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 Aumake. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Aumake.
Diversification Opportunities for Commonwealth Bank and Aumake
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Commonwealth and Aumake is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Aumake in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aumake 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 Aumake. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aumake has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Aumake go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Aumake
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 27.57 times less return on investment than Aumake. But when comparing it to its historical volatility, Commonwealth Bank of is 37.33 times less risky than Aumake. It trades about 0.09 of its potential returns per unit of risk. Aumake is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 0.40 in Aumake on September 14, 2024 and sell it today you would earn a total of 0.10 from holding Aumake or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.71% |
| Values | Daily Returns |
Commonwealth Bank of vs. Aumake
Performance |
| Timeline |
| Commonwealth Bank |
| Aumake |
Commonwealth Bank and Aumake Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Aumake
The main advantage of trading using opposite Commonwealth Bank and Aumake positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Aumake 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 Aumake will offset losses from the drop in Aumake's long position.| Commonwealth Bank vs. Westpac Banking | Commonwealth Bank vs. De Grey Mining | Commonwealth Bank vs. Pointsbet Holdings | Commonwealth Bank vs. Indiana Resources |
| Aumake vs. Aneka Tambang Tbk | Aumake vs. Commonwealth Bank of | Aumake vs. Australia and New | Aumake vs. ANZ Group Holdings |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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