This website contains analytical tools to find correlations between financial instruments listed on the Australian Securities Exchange (ASX). A correlation is defined as a mutual relationship or connection between two or more things. In finance and investment industries, it is a statistic that measures the degree to which two securities move in relation to each other. For a more detailed description of correlations in finance see this Investopedia article.
How to use this information
There are many uses for stock correlation data, however the most important is providing information for portfolio diversification. In investing, diversification is the act of spreading your investments across a variety of assets in order to reduce risk. Basically the idea is "Don't put all of your eggs in one basket". Many investors who have taken measures to diversify their portfolios may find that their efforts have been wasted due to correlations between stocks. For instance, an investor might have stocks of CBA, and decied to diversify by buying stocks in ANZ and NAB. Unfortunately these stocks are highly correlated meaning that their prices will likely move together. Consequently the investor's portfolio is actually not as well diversified as they thought.
The information in this website and the links provided are for general information only and should not be taken as constituting professional advice. You should consider seeking independent legal, financial, taxation or other advice to check how the website information relates to your unique circumstances. ASXCorrelations is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.
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