Correlation Between Commonwealth Bank and Anatara Lifesciences

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

By analyzing existing cross correlation between Commonwealth Bank and Anatara Lifesciences, you can compare the effects of market volatilities on Commonwealth Bank and Anatara Lifesciences 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 Anatara Lifesciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Commonwealth Bank and Anatara Lifesciences.

Diversification Opportunities for Commonwealth Bank and Anatara Lifesciences

0.16

Correlation Coefficient

Commonwealth Bank  Anatara Lifesciences

Average diversification

The 3 months correlation between Commonwealth and Anatara is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank and Anatara Lifesciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anatara Lifesciences 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 are associated (or correlated) with Anatara Lifesciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anatara Lifesciences has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and Anatara Lifesciences go up and down completely randomly.

Pair Corralation between Commonwealth Bank and Anatara Lifesciences

Assuming the 90 days trading horizon Commonwealth Bank is expected to generate 20.76 times less return on investment than Anatara Lifesciences. But when comparing it to its historical volatility, Commonwealth Bank is 4.93 times less risky than Anatara Lifesciences. It trades about 0.01 of its potential returns per unit of risk. Anatara Lifesciences is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  5.70  in Anatara Lifesciences on November 29, 2024 and sell it today you would lose (0.20) from holding Anatara Lifesciences or give up 3.51% of portfolio value over 90 days.

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

Commonwealth Bank  vs.  Anatara Lifesciences

Commonwealth Bank

Risk-Adjusted Performance

Very Weak

Over the last 90 days Commonwealth Bank has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Commonwealth Bank is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Anatara Lifesciences

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Anatara Lifesciences are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Anatara Lifesciences may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Commonwealth Bank and Anatara Lifesciences

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

The idea behind Commonwealth Bank and Anatara Lifesciences 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.