Correlation Between CSL and Living Cell

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

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

Diversification Opportunities for CSL and Living Cell

-0.36

Correlation Coefficient

CSL  Living Cell

Very good diversification

The 3 months correlation between CSL and Living is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Living Cell Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Living Cell 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 Living Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Living Cell Technologies has no effect on the direction of CSL i.e., CSL and Living Cell go up and down completely randomly.

Pair Corralation between CSL and Living Cell

Assuming the 90 days horizon CSL is expected to under-perform the Living Cell. But the pink sheet apears to be less risky and, when comparing its historical volatility, CSL is 65.63 times less risky than Living Cell. The pink sheet trades about -0.01 of its potential returns per unit of risk. The Living Cell Technologies is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  0.41  in Living Cell Technologies on October 9, 2024 and sell it today you would lose (0.25) from holding Living Cell Technologies or give up 60.98% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.47%
Values	Daily Returns

CSL  vs.  Living Cell 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 fragile performance, the Stock's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Living Cell Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CSL and Living Cell

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

The idea behind CSL and Living Cell 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.

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.