Correlation Between CSL and Diamyd Medical

Can any of the company-specific risk be diversified away by investing in both CSL and Diamyd Medical 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 Diamyd Medical 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 Diamyd Medical AB, you can compare the effects of market volatilities on CSL and Diamyd Medical 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 Diamyd Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Diamyd Medical.

Diversification Opportunities for CSL and Diamyd Medical

0.81

Correlation Coefficient

CSL  Diamyd Medical

Very poor diversification

The 3 months correlation between CSL and Diamyd is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding CSL LTD SPONADR and Diamyd Medical AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamyd Medical AB 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 Diamyd Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamyd Medical AB has no effect on the direction of CSL i.e., CSL and Diamyd Medical go up and down completely randomly.

Pair Corralation between CSL and Diamyd Medical

Assuming the 90 days trading horizon CSL LTD SPONADR is expected to generate 0.25 times more return on investment than Diamyd Medical. However, CSL LTD SPONADR is 4.08 times less risky than Diamyd Medical. It trades about -0.14 of its potential returns per unit of risk. Diamyd Medical AB is currently generating about -0.17 per unit of risk. If you would invest  8,232  in CSL LTD SPONADR on December 28, 2024 and sell it today you would lose (932.00) from holding CSL LTD SPONADR or give up 11.32% of portfolio value over 90 days.

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

CSL LTD SPONADR  vs.  Diamyd Medical AB

CSL LTD SPONADR

Risk-Adjusted Performance

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 latest weak performance, the Stock's forward-looking indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Diamyd Medical AB

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diamyd Medical AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CSL and Diamyd Medical

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

The idea behind CSL LTD SPONADR and Diamyd Medical AB 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.