Correlation Between Commonwealth Bank and Agricultural Bank
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Agricultural Bank 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 Agricultural Bank 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 Agricultural Bank of, you can compare the effects of market volatilities on Commonwealth Bank and Agricultural Bank 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 Agricultural Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Agricultural Bank.
Diversification Opportunities for Commonwealth Bank and Agricultural Bank
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Commonwealth and Agricultural is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Agricultural Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Agricultural Bank 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 Agricultural Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Agricultural Bank has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Agricultural Bank go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Agricultural Bank
Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.21 times more return on investment than Agricultural Bank. However, Commonwealth Bank of is 4.69 times less risky than Agricultural Bank. It trades about 0.52 of its potential returns per unit of risk. Agricultural Bank of is currently generating about 0.03 per unit of risk. If you would invest 8,699 in Commonwealth Bank of on August 28, 2024 and sell it today you would earn a total of 1,197 from holding Commonwealth Bank of or generate 13.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Commonwealth Bank of vs. Agricultural Bank of
Performance |
| Timeline |
| Commonwealth Bank |
| Agricultural Bank |
Commonwealth Bank and Agricultural Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Agricultural Bank
The main advantage of trading using opposite Commonwealth Bank and Agricultural Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Agricultural Bank 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 Agricultural Bank will offset losses from the drop in Agricultural Bank's long position.| Commonwealth Bank vs. Superior Plus Corp | Commonwealth Bank vs. NMI Holdings | Commonwealth Bank vs. Origin Agritech | Commonwealth Bank vs. SIVERS SEMICONDUCTORS AB |
| Agricultural Bank vs. Superior Plus Corp | Agricultural Bank vs. NMI Holdings | Agricultural Bank vs. Origin Agritech | Agricultural Bank vs. SIVERS SEMICONDUCTORS AB |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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