Correlation Between Telix Pharmaceuticals and Commonwealth Bank

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

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

Diversification Opportunities for Telix Pharmaceuticals and Commonwealth Bank

0.87

Correlation Coefficient

Telix Pharmaceuticals  Commonwealth Bank

Very poor diversification

The 3 months correlation between Telix and Commonwealth is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Telix Pharmaceuticals and Commonwealth Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Commonwealth Bank and Telix Pharmaceuticals 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 Telix Pharmaceuticals 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 Telix Pharmaceuticals i.e., Telix Pharmaceuticals and Commonwealth Bank go up and down completely randomly.

Pair Corralation between Telix Pharmaceuticals and Commonwealth Bank

Assuming the 90 days trading horizon Telix Pharmaceuticals is expected to generate 1.56 times more return on investment than Commonwealth Bank. However, Telix Pharmaceuticals is 1.56 times more volatile than Commonwealth Bank. It trades about 0.19 of its potential returns per unit of risk. Commonwealth Bank is currently generating about 0.12 per unit of risk. If you would invest  2,069  in Telix Pharmaceuticals on September 21, 2024 and sell it today you would earn a total of  498.00  from holding Telix Pharmaceuticals or generate 24.07% return on investment over 90 days.

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

Telix Pharmaceuticals  vs.  Commonwealth Bank

Telix Pharmaceuticals

Risk-Adjusted Performance

14 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Telix Pharmaceuticals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Commonwealth Bank

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Commonwealth Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Commonwealth Bank may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Telix Pharmaceuticals and Commonwealth Bank

The main advantage of trading using opposite Telix Pharmaceuticals and Commonwealth Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Telix Pharmaceuticals 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 Telix Pharmaceuticals 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.