Correlation Between Aeris Environmental and CSL

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

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

Diversification Opportunities for Aeris Environmental and CSL

0.54

Correlation Coefficient

Aeris Environmental  CSL

Very weak diversification

The 3 months correlation between Aeris and CSL is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Aeris Environmental and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Aeris Environmental 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 Aeris Environmental are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Aeris Environmental i.e., Aeris Environmental and CSL go up and down completely randomly.

Pair Corralation between Aeris Environmental and CSL

Assuming the 90 days trading horizon Aeris Environmental is expected to generate 4.89 times more return on investment than CSL. However, Aeris Environmental is 4.89 times more volatile than CSL. It trades about 0.04 of its potential returns per unit of risk. CSL is currently generating about -0.08 per unit of risk. If you would invest  7.80  in Aeris Environmental on October 22, 2024 and sell it today you would earn a total of  0.10  from holding Aeris Environmental or generate 1.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	94.74%
Values	Daily Returns

Aeris Environmental  vs.  CSL

Aeris Environmental

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Aeris Environmental has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Aeris Environmental and CSL

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

The idea behind Aeris Environmental and CSL 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.