Correlation Between Ausom Enterprise and CSB Bank

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

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

Diversification Opportunities for Ausom Enterprise and CSB Bank

0.68

Correlation Coefficient

Ausom Enterprise  CSB Bank

Poor diversification

The 3 months correlation between Ausom and CSB is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ausom Enterprise Limited and CSB Bank Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSB Bank Limited and Ausom Enterprise 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 Ausom Enterprise Limited are associated (or correlated) with CSB Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSB Bank Limited has no effect on the direction of Ausom Enterprise i.e., Ausom Enterprise and CSB Bank go up and down completely randomly.

Pair Corralation between Ausom Enterprise and CSB Bank

Assuming the 90 days trading horizon Ausom Enterprise Limited is expected to under-perform the CSB Bank. In addition to that, Ausom Enterprise is 1.2 times more volatile than CSB Bank Limited. It trades about -0.13 of its total potential returns per unit of risk. CSB Bank Limited is currently generating about -0.07 per unit of volatility. If you would invest  32,940  in CSB Bank Limited on December 26, 2024 and sell it today you would lose (3,005) from holding CSB Bank Limited or give up 9.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Ausom Enterprise Limited  vs.  CSB Bank Limited

Ausom Enterprise

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ausom Enterprise Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

CSB Bank Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days CSB Bank Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Ausom Enterprise and CSB Bank

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

The idea behind Ausom Enterprise Limited and CSB Bank Limited 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.