Correlation Between Judo Capital and Auswide Bank

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

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

Diversification Opportunities for Judo Capital and Auswide Bank

0.5

Correlation Coefficient

Judo Capital  Auswide Bank

Very weak diversification

The 3 months correlation between Judo and Auswide is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Judo Capital Holdings and Auswide Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Auswide Bank and Judo Capital 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 Judo Capital Holdings 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 Judo Capital i.e., Judo Capital and Auswide Bank go up and down completely randomly.

Pair Corralation between Judo Capital and Auswide Bank

Assuming the 90 days trading horizon Judo Capital Holdings is expected to generate 1.52 times more return on investment than Auswide Bank. However, Judo Capital is 1.52 times more volatile than Auswide Bank. It trades about 0.11 of its potential returns per unit of risk. Auswide Bank is currently generating about 0.0 per unit of risk. If you would invest  91.00  in Judo Capital Holdings on October 1, 2024 and sell it today you would earn a total of  94.00  from holding Judo Capital Holdings or generate 103.3% return on investment over 90 days.

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

Judo Capital Holdings  vs.  Auswide Bank

Judo Capital Holdings

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Judo Capital Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Judo Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Auswide Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Auswide Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Auswide Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Judo Capital and Auswide Bank

The main advantage of trading using opposite Judo Capital and Auswide Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Judo Capital 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 Judo Capital Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.