Correlation Between CSL and HAVN Life

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

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

Diversification Opportunities for CSL and HAVN Life

-0.85

Correlation Coefficient

CSL  HAVN Life

Pay attention - limited upside

The 3 months correlation between CSL and HAVN is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN Life Sciences and CSL 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 CSL Limited are associated (or correlated) with HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of CSL i.e., CSL and HAVN Life go up and down completely randomly.

Pair Corralation between CSL and HAVN Life

Assuming the 90 days horizon CSL is expected to generate 347.01 times less return on investment than HAVN Life. But when comparing it to its historical volatility, CSL Limited is 27.03 times less risky than HAVN Life. It trades about 0.01 of its potential returns per unit of risk. HAVN Life Sciences is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  6.00  in HAVN Life Sciences on September 23, 2024 and sell it today you would lose (5.48) from holding HAVN Life Sciences or give up 91.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	92.97%
Values	Daily Returns

CSL Limited  vs.  HAVN Life Sciences

CSL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

HAVN Life Sciences

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HAVN Life Sciences are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, HAVN Life reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and HAVN Life

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

The idea behind CSL Limited and HAVN Life Sciences 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.