Correlation Between CSL and Onxeo SA

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

By analyzing existing cross correlation between CSL LTD SPONADR and Onxeo SA, you can compare the effects of market volatilities on CSL and Onxeo SA 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 Onxeo SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Onxeo SA.

Diversification Opportunities for CSL and Onxeo SA

0.53

Correlation Coefficient

CSL  Onxeo SA

Very weak diversification

The 3 months correlation between CSL and Onxeo is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding CSL LTD SPONADR and Onxeo SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Onxeo SA 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 LTD SPONADR are associated (or correlated) with Onxeo SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Onxeo SA has no effect on the direction of CSL i.e., CSL and Onxeo SA go up and down completely randomly.

Pair Corralation between CSL and Onxeo SA

Assuming the 90 days trading horizon CSL LTD SPONADR is expected to under-perform the Onxeo SA. But the stock apears to be less risky and, when comparing its historical volatility, CSL LTD SPONADR is 7.53 times less risky than Onxeo SA. The stock trades about -0.14 of its potential returns per unit of risk. The Onxeo SA is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  7.14  in Onxeo SA on October 1, 2024 and sell it today you would lose (0.09) from holding Onxeo SA or give up 1.26% of portfolio value over 90 days.

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

CSL LTD SPONADR  vs.  Onxeo SA

CSL LTD SPONADR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL LTD SPONADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable forward-looking indicators, CSL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Onxeo SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Onxeo SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Onxeo SA is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CSL and Onxeo SA

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

The idea behind CSL LTD SPONADR and Onxeo SA 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.