Correlation Between Bank of Queensland Limite and Centrex Metals

Can any of the company-specific risk be diversified away by investing in both Bank of Queensland Limite and Centrex Metals 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 Bank of Queensland Limite and Centrex Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bank of Queensland and Centrex Metals, you can compare the effects of market volatilities on Bank of Queensland Limite and Centrex Metals 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 Bank of Queensland Limite with a short position of Centrex Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of Queensland Limite and Centrex Metals.

Diversification Opportunities for Bank of Queensland Limite and Centrex Metals

-0.7

Correlation Coefficient

Bank of Queensland Limite  Centrex Metals

Excellent diversification

The 3 months correlation between Bank and Centrex is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Bank of Queensland and Centrex Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centrex Metals and Bank of Queensland Limite 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 Bank of Queensland are associated (or correlated) with Centrex Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centrex Metals has no effect on the direction of Bank of Queensland Limite i.e., Bank of Queensland Limite and Centrex Metals go up and down completely randomly.

Pair Corralation between Bank of Queensland Limite and Centrex Metals

Assuming the 90 days trading horizon Bank of Queensland Limite is expected to generate 3.53 times less return on investment than Centrex Metals. But when comparing it to its historical volatility, Bank of Queensland is 9.23 times less risky than Centrex Metals. It trades about 0.04 of its potential returns per unit of risk. Centrex Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1.70  in Centrex Metals on December 22, 2024 and sell it today you would earn a total of  0.00  from holding Centrex Metals or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Bank of Queensland  vs.  Centrex Metals

Bank of Queensland Limite

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank of Queensland are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Bank of Queensland Limite is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Centrex Metals

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Centrex Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable primary indicators, Centrex Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Bank of Queensland Limite and Centrex Metals

The main advantage of trading using opposite Bank of Queensland Limite and Centrex Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of Queensland Limite position performs unexpectedly, Centrex Metals 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 Centrex Metals will offset losses from the drop in Centrex Metals' long position.

The idea behind Bank of Queensland and Centrex Metals 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.