Correlation Between Global Data and Auswide Bank

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

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

Diversification Opportunities for Global Data and Auswide Bank

-0.69

Correlation Coefficient

Global Data  Auswide Bank

Excellent diversification

The 3 months correlation between Global and Auswide is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Global Data Centre and Auswide Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auswide Bank and Global Data 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 Global Data Centre are associated (or correlated) with Auswide Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Auswide Bank has no effect on the direction of Global Data i.e., Global Data and Auswide Bank go up and down completely randomly.

Pair Corralation between Global Data and Auswide Bank

Assuming the 90 days trading horizon Global Data Centre is expected to generate 2.8 times more return on investment than Auswide Bank. However, Global Data is 2.8 times more volatile than Auswide Bank. It trades about 0.03 of its potential returns per unit of risk. Auswide Bank is currently generating about -0.01 per unit of risk. If you would invest  141.00  in Global Data Centre on September 20, 2024 and sell it today you would earn a total of  2.00  from holding Global Data Centre or generate 1.42% return on investment over 90 days.

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

Global Data Centre  vs.  Auswide Bank

Global Data Centre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Data Centre 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 fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Auswide Bank

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Auswide Bank are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Auswide Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Global Data and Auswide Bank

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

The idea behind Global Data Centre and Auswide 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.