Correlation Between CSL and Mach7 Technologies

Can any of the company-specific risk be diversified away by investing in both CSL and Mach7 Technologies 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 Mach7 Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSL and Mach7 Technologies, you can compare the effects of market volatilities on CSL and Mach7 Technologies 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 Mach7 Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Mach7 Technologies.

Diversification Opportunities for CSL and Mach7 Technologies

0.77

Correlation Coefficient

CSL  Mach7 Technologies

Poor diversification

The 3 months correlation between CSL and Mach7 is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Mach7 Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mach7 Technologies 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 Mach7 Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mach7 Technologies has no effect on the direction of CSL i.e., CSL and Mach7 Technologies go up and down completely randomly.

Pair Corralation between CSL and Mach7 Technologies

Assuming the 90 days trading horizon CSL is expected to generate 0.33 times more return on investment than Mach7 Technologies. However, CSL is 2.99 times less risky than Mach7 Technologies. It trades about -0.11 of its potential returns per unit of risk. Mach7 Technologies is currently generating about -0.24 per unit of risk. If you would invest  30,166  in CSL on September 12, 2024 and sell it today you would lose (2,205) from holding CSL or give up 7.31% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

CSL  vs.  Mach7 Technologies

CSL

Risk-Adjusted Performance

0 of 100

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 latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Mach7 Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Mach7 Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with CSL and Mach7 Technologies

The main advantage of trading using opposite CSL and Mach7 Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Mach7 Technologies 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 Mach7 Technologies will offset losses from the drop in Mach7 Technologies' long position.

The idea behind CSL and Mach7 Technologies 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.