Correlation Between Shenandoah Telecommunicatio and CSL

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

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

Diversification Opportunities for Shenandoah Telecommunicatio and CSL

0.12

Correlation Coefficient

Shenandoah Telecommunicatio  CSL

Average diversification

The 3 months correlation between Shenandoah and CSL is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Shenandoah Telecommunications and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Shenandoah Telecommunicatio i.e., Shenandoah Telecommunicatio and CSL go up and down completely randomly.

Pair Corralation between Shenandoah Telecommunicatio and CSL

Assuming the 90 days horizon Shenandoah Telecommunications is expected to under-perform the CSL. In addition to that, Shenandoah Telecommunicatio is 2.54 times more volatile than CSL Limited. It trades about -0.16 of its total potential returns per unit of risk. CSL Limited is currently generating about 0.09 per unit of volatility. If you would invest  17,100  in CSL Limited on October 11, 2024 and sell it today you would earn a total of  220.00  from holding CSL Limited or generate 1.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shenandoah Telecommunications  vs.  CSL Limited

Shenandoah Telecommunicatio

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Shenandoah Telecommunications are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Shenandoah Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

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 nearly stable basic indicators, CSL is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Shenandoah Telecommunicatio and CSL

The main advantage of trading using opposite Shenandoah Telecommunicatio and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shenandoah Telecommunicatio 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 Shenandoah Telecommunications 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.