Correlation Between CSL and Reunion Neuroscience

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

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

Diversification Opportunities for CSL and Reunion Neuroscience

-0.88

Correlation Coefficient

CSL  Reunion Neuroscience

Pay attention - limited upside

The 3 months correlation between CSL and Reunion is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Reunion Neuroscience in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Reunion Neuroscience 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 Reunion Neuroscience. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Reunion Neuroscience has no effect on the direction of CSL i.e., CSL and Reunion Neuroscience go up and down completely randomly.

Pair Corralation between CSL and Reunion Neuroscience

If you would invest  112.00  in Reunion Neuroscience on September 24, 2024 and sell it today you would earn a total of  0.00  from holding Reunion Neuroscience or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	0.6%
Values	Daily Returns

CSL  vs.  Reunion Neuroscience

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 fragile performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Reunion Neuroscience

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Reunion Neuroscience has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Reunion Neuroscience is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CSL and Reunion Neuroscience

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

The idea behind CSL and Reunion Neuroscience 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.