Correlation Between Commonwealth Bank and Austevoll Seafood
Can any of the company-specific risk be diversified away by investing in both Commonwealth Bank and Austevoll Seafood 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 Austevoll Seafood 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 Austevoll Seafood ASA, you can compare the effects of market volatilities on Commonwealth Bank and Austevoll Seafood 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 Austevoll Seafood. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Austevoll Seafood.
Diversification Opportunities for Commonwealth Bank and Austevoll Seafood
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Commonwealth and Austevoll is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and Austevoll Seafood ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Austevoll Seafood ASA 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 Austevoll Seafood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Austevoll Seafood ASA has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Austevoll Seafood go up and down completely randomly.
Pair Corralation between Commonwealth Bank and Austevoll Seafood
Assuming the 90 days horizon Commonwealth Bank is expected to generate 2.55 times less return on investment than Austevoll Seafood. But when comparing it to its historical volatility, Commonwealth Bank of is 4.24 times less risky than Austevoll Seafood. It trades about 0.08 of its potential returns per unit of risk. Austevoll Seafood ASA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 361.00 in Austevoll Seafood ASA on September 3, 2024 and sell it today you would earn a total of 494.00 from holding Austevoll Seafood ASA or generate 136.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Commonwealth Bank of vs. Austevoll Seafood ASA
Performance |
| Timeline |
| Commonwealth Bank |
| Austevoll Seafood ASA |
Commonwealth Bank and Austevoll Seafood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Commonwealth Bank and Austevoll Seafood
The main advantage of trading using opposite Commonwealth Bank and Austevoll Seafood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Commonwealth Bank position performs unexpectedly, Austevoll Seafood 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 Austevoll Seafood will offset losses from the drop in Austevoll Seafood's long position.The idea behind Commonwealth Bank of and Austevoll Seafood ASA 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.| Austevoll Seafood vs. Infrastrutture Wireless Italiane | Austevoll Seafood vs. Tower One Wireless | Austevoll Seafood vs. 24SEVENOFFICE GROUP AB | Austevoll Seafood vs. MINCO SILVER |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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