Correlation Between Virpax Pharmaceuticals and CSL

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

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

Diversification Opportunities for Virpax Pharmaceuticals and CSL

0.51

Correlation Coefficient

Virpax Pharmaceuticals  CSL

Very weak diversification

The 3 months correlation between Virpax and CSL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Virpax Pharmaceuticals and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Virpax Pharmaceuticals 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 Virpax Pharmaceuticals 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 Virpax Pharmaceuticals i.e., Virpax Pharmaceuticals and CSL go up and down completely randomly.

Pair Corralation between Virpax Pharmaceuticals and CSL

Given the investment horizon of 90 days Virpax Pharmaceuticals is expected to under-perform the CSL. In addition to that, Virpax Pharmaceuticals is 5.41 times more volatile than CSL Limited. It trades about -0.01 of its total potential returns per unit of risk. CSL Limited is currently generating about 0.01 per unit of volatility. If you would invest  17,013  in CSL Limited on October 5, 2024 and sell it today you would lose (293.00) from holding CSL Limited or give up 1.72% of portfolio value over 90 days.

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

Virpax Pharmaceuticals  vs.  CSL Limited

Virpax Pharmaceuticals

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 Virpax Pharmaceuticals and CSL

The main advantage of trading using opposite Virpax Pharmaceuticals and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Virpax Pharmaceuticals 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 Virpax Pharmaceuticals 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.