Correlation Between CSL and CSL
Can any of the company-specific risk be diversified away by investing in both CSL 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 CSL and CSL 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 CSL Limited, you can compare the effects of market volatilities on CSL 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 CSL with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and CSL.
Diversification Opportunities for CSL and CSL
Almost no diversification
The 3 months correlation between CSL and CSL is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding CSL LTD SPONADR and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited 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 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 Limited has no effect on the direction of CSL i.e., CSL and CSL go up and down completely randomly.
Pair Corralation between CSL and CSL
Assuming the 90 days trading horizon CSL LTD SPONADR is expected to under-perform the CSL. But the stock apears to be less risky and, when comparing its historical volatility, CSL LTD SPONADR is 1.02 times less risky than CSL. The stock trades about -0.12 of its potential returns per unit of risk. The CSL Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 16,866 in CSL Limited on December 7, 2024 and sell it today you would lose (1,478) from holding CSL Limited or give up 8.76% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 100.0% |
Values | Daily Returns |
CSL LTD SPONADR vs. CSL Limited
Performance |
Timeline |
CSL LTD SPONADR |
CSL Limited |
CSL and CSL Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CSL and CSL
The main advantage of trading using opposite CSL and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL 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.CSL vs. Angang Steel | CSL vs. ANGANG STEEL H | CSL vs. MEDCAW INVESTMENTS LS 01 | CSL vs. New Residential Investment |
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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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