Correlation Between CSL and Essilor International

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

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

Diversification Opportunities for CSL and Essilor International

-0.62

Correlation Coefficient

CSL  Essilor International

Excellent diversification

The 3 months correlation between CSL and Essilor is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and Essilor International SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Essilor International 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 Essilor International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Essilor International has no effect on the direction of CSL i.e., CSL and Essilor International go up and down completely randomly.

Pair Corralation between CSL and Essilor International

Assuming the 90 days horizon CSL Limited is expected to under-perform the Essilor International. In addition to that, CSL is 2.95 times more volatile than Essilor International SA. It trades about -0.01 of its total potential returns per unit of risk. Essilor International SA is currently generating about 0.17 per unit of volatility. If you would invest  13,961  in Essilor International SA on July 2, 2025 and sell it today you would earn a total of  2,339  from holding Essilor International SA or generate 16.75% return on investment over 90 days.

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

CSL Limited  vs.  Essilor International SA

CSL Limited

Risk-Adjusted Performance

Weakest

Over the last 90 days CSL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable technical indicators, CSL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Essilor International

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Essilor International SA are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Essilor International showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and Essilor International

The main advantage of trading using opposite CSL and Essilor International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Essilor International 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 Essilor International will offset losses from the drop in Essilor International's long position.

The idea behind CSL Limited and Essilor International SA 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.