Correlation Between Commonwealth Bank and GALENA MINING

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

Diversification Opportunities for Commonwealth Bank and GALENA MINING

0.0

Correlation Coefficient

Commonwealth Bank  GALENA MINING

Pay attention - limited upside

The 3 months correlation between Commonwealth and GALENA is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Commonwealth Bank of and GALENA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GALENA MINING LTD 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 GALENA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GALENA MINING LTD has no effect on the direction of Commonwealth Bank i.e., Commonwealth Bank and GALENA MINING go up and down completely randomly.

Pair Corralation between Commonwealth Bank and GALENA MINING

Assuming the 90 days horizon Commonwealth Bank of is expected to generate 0.2 times more return on investment than GALENA MINING. However, Commonwealth Bank of is 5.09 times less risky than GALENA MINING. It trades about 0.07 of its potential returns per unit of risk. GALENA MINING LTD is currently generating about -0.02 per unit of risk. If you would invest  6,030  in Commonwealth Bank of on October 5, 2024 and sell it today you would earn a total of  3,211  from holding Commonwealth Bank of or generate 53.25% return on investment over 90 days.

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

Commonwealth Bank of  vs.  GALENA MINING LTD

Commonwealth Bank

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Commonwealth Bank of has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly fragile basic indicators, Commonwealth Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

GALENA MINING LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GALENA MINING LTD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, GALENA MINING is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Commonwealth Bank and GALENA MINING

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

The idea behind Commonwealth Bank of and GALENA MINING LTD 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.

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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.