Correlation Between Bio-Techne Corp and CSL

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

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

Diversification Opportunities for Bio-Techne Corp and CSL

-0.46

Correlation Coefficient

Bio-Techne Corp  CSL

Very good diversification

The 3 months correlation between Bio-Techne and CSL is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Bio Techne Corp and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Bio-Techne Corp 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 Bio Techne Corp 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 Bio-Techne Corp i.e., Bio-Techne Corp and CSL go up and down completely randomly.

Pair Corralation between Bio-Techne Corp and CSL

Assuming the 90 days trading horizon Bio Techne Corp is expected to generate 1.74 times more return on investment than CSL. However, Bio-Techne Corp is 1.74 times more volatile than CSL Limited. It trades about 0.02 of its potential returns per unit of risk. CSL Limited is currently generating about -0.05 per unit of risk. If you would invest  7,092  in Bio Techne Corp on October 7, 2024 and sell it today you would earn a total of  58.00  from holding Bio Techne Corp or generate 0.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Bio Techne Corp  vs.  CSL Limited

Bio Techne Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Bio Techne Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Bio-Techne Corp 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Bio-Techne Corp and CSL

The main advantage of trading using opposite Bio-Techne Corp and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bio-Techne Corp 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 Bio Techne Corp 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.

Check out your portfolio center.

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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.