Correlation Between CSL and CSL

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

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

Diversification Opportunities for CSL and CSL

0.84

Correlation Coefficient

CSL  CSL

Very poor diversification

The 3 months correlation between CSL and CSL is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and CSL 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 CSL Limited 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 CSL i.e., CSL and CSL go up and down completely randomly.

Pair Corralation between CSL and CSL

Assuming the 90 days horizon CSL Limited is expected to generate 2.95 times more return on investment than CSL. However, CSL is 2.95 times more volatile than CSL. It trades about 0.06 of its potential returns per unit of risk. CSL is currently generating about 0.14 per unit of risk. If you would invest  14,650  in CSL Limited on May 14, 2025 and sell it today you would earn a total of  1,709  from holding CSL Limited or generate 11.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.39%
Values	Daily Returns

CSL Limited  vs.  CSL

CSL Limited

Risk-Adjusted Performance

Mild

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical indicators, CSL reported solid returns over the last few months and may actually be approaching a breakup point.

CSL

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CSL are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with CSL and CSL

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

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 Bonds Directory module to find actively traded corporate debentures issued by US companies.