Correlation Between Dug Technology Ltd and Commonwealth Bank

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

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

Diversification Opportunities for Dug Technology Ltd and Commonwealth Bank

0.26

Correlation Coefficient

Dug Technology Ltd  Commonwealth Bank

Modest diversification

The 3 months correlation between Dug and Commonwealth is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Dug Technology and Commonwealth Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Dug Technology Ltd 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 Dug Technology are associated (or correlated) with Commonwealth Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Commonwealth Bank has no effect on the direction of Dug Technology Ltd i.e., Dug Technology Ltd and Commonwealth Bank go up and down completely randomly.

Pair Corralation between Dug Technology Ltd and Commonwealth Bank

Assuming the 90 days trading horizon Dug Technology is expected to under-perform the Commonwealth Bank. In addition to that, Dug Technology Ltd is 3.39 times more volatile than Commonwealth Bank. It trades about -0.06 of its total potential returns per unit of risk. Commonwealth Bank is currently generating about 0.0 per unit of volatility. If you would invest  15,113  in Commonwealth Bank on December 31, 2024 and sell it today you would lose (70.00) from holding Commonwealth Bank or give up 0.46% of portfolio value over 90 days.

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

Dug Technology  vs.  Commonwealth Bank

Dug Technology Ltd

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dug Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in May 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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.

Pair Trading with Dug Technology Ltd and Commonwealth Bank

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

The idea behind Dug Technology and Commonwealth Bank 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.