Correlation Between CSL and ARN Media

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Can any of the company-specific risk be diversified away by investing in both CSL and ARN Media 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 ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and ARN Media Limited, you can compare the effects of market volatilities on CSL and ARN Media 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 ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and ARN Media.

Diversification Opportunities for CSL and ARN Media

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between CSL and ARN is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CSL and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media 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 are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of CSL i.e., CSL and ARN Media go up and down completely randomly.

Pair Corralation between CSL and ARN Media

Assuming the 90 days trading horizon CSL is expected to generate 0.39 times more return on investment than ARN Media. However, CSL is 2.56 times less risky than ARN Media. It trades about 0.0 of its potential returns per unit of risk. ARN Media Limited is currently generating about -0.01 per unit of risk. If you would invest  29,002  in CSL on October 15, 2024 and sell it today you would lose (493.00) from holding CSL or give up 1.7% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

CSL  vs.  ARN Media Limited

 Performance 
       Timeline  
CSL 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days CSL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable essential indicators, CSL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
ARN Media Limited 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days ARN Media Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ARN Media is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

CSL and ARN Media Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with CSL and ARN Media

The main advantage of trading using opposite CSL and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.
The idea behind CSL and ARN Media 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.
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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