Correlation Between Commonwealth Bank and Genertec Universal

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Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Genertec Universal 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 Genertec Universal 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 Genertec Universal Medical, you can compare the effects of market volatilities on Commonwealth Bank and Genertec Universal 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 Genertec Universal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Genertec Universal.

Diversification Opportunities for Commonwealth Bank and Genertec Universal

0.19
  Correlation Coefficient

Average diversification

The 3 months correlation between Commonwealth and Genertec is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Genertec Universal Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genertec Universal 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 Genertec Universal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genertec Universal has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Genertec Universal go up and down completely randomly.

Pair Corralation between Commonwealth Bank and Genertec Universal

Assuming the 90 days horizon Commonwealth Bank of is expected to under-perform the Genertec Universal. But the stock apears to be less risky and, when comparing its historical volatility, Commonwealth Bank of is 2.91 times less risky than Genertec Universal. The stock trades about -0.06 of its potential returns per unit of risk. The Genertec Universal Medical is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  56.00  in Genertec Universal Medical on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Genertec Universal Medical or generate 1.79% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy94.44%
ValuesDaily Returns

Commonwealth Bank of  vs.  Genertec Universal Medical

 Performance 
       Timeline  
Commonwealth Bank 

Risk-Adjusted Performance

14 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank of are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Commonwealth Bank reported solid returns over the last few months and may actually be approaching a breakup point.
Genertec Universal 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Genertec Universal Medical are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Genertec Universal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Commonwealth Bank and Genertec Universal Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Commonwealth Bank and Genertec Universal

The main advantage of trading using opposite Commonwealth Bank and Genertec Universal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Genertec Universal 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 Genertec Universal will offset losses from the drop in Genertec Universal's long position.
The idea behind Commonwealth Bank of and Genertec Universal Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.

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