Correlation Between Commonwealth Bank and Oakridge International
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Oakridge International 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 Oakridge International 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 Oakridge International, you can compare the effects of market volatilities on Commonwealth Bank and Oakridge International 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 Oakridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Oakridge International.
Diversification Opportunities for Commonwealth Bank and Oakridge International
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Commonwealth and Oakridge is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Oakridge International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakridge International 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 Oakridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakridge International has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Oakridge International go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Oakridge International
Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 2.09 times less return on investment than Oakridge International. But when comparing it to its historical volatility, Commonwealth Bank of is 12.86 times less risky than Oakridge International. It trades about 0.09 of its potential returns per unit of risk. Oakridge International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 8.00 in Oakridge International on August 31, 2024 and sell it today you would lose (1.00) from holding Oakridge International or give up 12.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 93.25% |
| Values | Daily Returns |
Commonwealth Bank of vs. Oakridge International
Performance |
| Timeline |
| Commonwealth Bank |
| Oakridge International |
Commonwealth Bank and Oakridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Oakridge International
The main advantage of trading using opposite Commonwealth Bank and Oakridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Oakridge International 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 Oakridge International will offset losses from the drop in Oakridge International's long position.| Commonwealth Bank vs. Platinum Asia Investments | Commonwealth Bank vs. Hutchison Telecommunications | Commonwealth Bank vs. Australian Agricultural | Commonwealth Bank vs. Sandon Capital Investments |
| Oakridge International vs. Stelar Metals | Oakridge International vs. Truscott Mining Corp | Oakridge International vs. Mayfield Childcare | Oakridge International vs. Metro Mining |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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