Correlation Between TC BioPharm and CSL

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

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

Diversification Opportunities for TC BioPharm and CSL

0.77

Correlation Coefficient

TC BioPharm  CSL

Poor diversification

The 3 months correlation between TCBPW and CSL is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding TC BioPharm plc and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and TC BioPharm 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 TC BioPharm plc 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 has no effect on the direction of TC BioPharm i.e., TC BioPharm and CSL go up and down completely randomly.

Pair Corralation between TC BioPharm and CSL

Assuming the 90 days horizon TC BioPharm plc is expected to generate 25.54 times more return on investment than CSL. However, TC BioPharm is 25.54 times more volatile than CSL. It trades about 0.08 of its potential returns per unit of risk. CSL is currently generating about -0.25 per unit of risk. If you would invest  2.50  in TC BioPharm plc on September 23, 2024 and sell it today you would lose (0.99) from holding TC BioPharm plc or give up 39.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

TC BioPharm plc  vs.  CSL

TC BioPharm plc

Risk-Adjusted Performance

7 of 100

OK

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

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.

Pair Trading with TC BioPharm and CSL

The main advantage of trading using opposite TC BioPharm and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TC BioPharm 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 TC BioPharm plc and CSL 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.