Correlation Between Nutriband Warrant and CSL

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

By analyzing existing cross correlation between Nutriband Warrant and CSL Limited, you can compare the effects of market volatilities on Nutriband Warrant and CSL 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 Nutriband Warrant with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutriband Warrant and CSL.

Diversification Opportunities for Nutriband Warrant and CSL

-0.5

Correlation Coefficient

Nutriband Warrant  CSL

Very good diversification

The 3 months correlation between Nutriband and CSL is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Nutriband Warrant and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Nutriband Warrant 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 Nutriband Warrant are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL Limited has no effect on the direction of Nutriband Warrant i.e., Nutriband Warrant and CSL go up and down completely randomly.

Pair Corralation between Nutriband Warrant and CSL

Assuming the 90 days horizon Nutriband Warrant is expected to generate 7.65 times more return on investment than CSL. However, Nutriband Warrant is 7.65 times more volatile than CSL Limited. It trades about 0.11 of its potential returns per unit of risk. CSL Limited is currently generating about 0.01 per unit of risk. If you would invest  47.00  in Nutriband Warrant on October 5, 2024 and sell it today you would earn a total of  123.77  from holding Nutriband Warrant or generate 263.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.52%
Values	Daily Returns

Nutriband Warrant  vs.  CSL Limited

Nutriband Warrant

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutriband Warrant are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak fundamental drivers, Nutriband Warrant showed solid returns over the last few months and may actually be approaching a breakup point.

CSL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL Limited 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 technical 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 Nutriband Warrant and CSL

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

The idea behind Nutriband Warrant and CSL 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.

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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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.