Correlation Between CSL and WUXI BIOLOGICS

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

By analyzing existing cross correlation between CSL LTD SPONADR and WUXI BIOLOGICS UNSPADR2, you can compare the effects of market volatilities on CSL and WUXI BIOLOGICS 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 WUXI BIOLOGICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and WUXI BIOLOGICS.

Diversification Opportunities for CSL and WUXI BIOLOGICS

0.69

Correlation Coefficient

CSL  WUXI BIOLOGICS

Poor diversification

The 3 months correlation between CSL and WUXI is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CSL LTD SPONADR and WUXI BIOLOGICS UNSPADR2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS UNSPADR2 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 LTD SPONADR are associated (or correlated) with WUXI BIOLOGICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS UNSPADR2 has no effect on the direction of CSL i.e., CSL and WUXI BIOLOGICS go up and down completely randomly.

Pair Corralation between CSL and WUXI BIOLOGICS

Assuming the 90 days trading horizon CSL is expected to generate 6.04 times less return on investment than WUXI BIOLOGICS. But when comparing it to its historical volatility, CSL LTD SPONADR is 1.84 times less risky than WUXI BIOLOGICS. It trades about 0.04 of its potential returns per unit of risk. WUXI BIOLOGICS UNSPADR2 is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  540.00  in WUXI BIOLOGICS UNSPADR2 on May 5, 2025 and sell it today you would earn a total of  165.00  from holding WUXI BIOLOGICS UNSPADR2 or generate 30.56% return on investment over 90 days.

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

CSL LTD SPONADR  vs.  WUXI BIOLOGICS UNSPADR2

CSL LTD SPONADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSL LTD SPONADR are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable forward-looking indicators, CSL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

WUXI BIOLOGICS UNSPADR2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in WUXI BIOLOGICS UNSPADR2 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, WUXI BIOLOGICS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and WUXI BIOLOGICS

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

The idea behind CSL LTD SPONADR and WUXI BIOLOGICS UNSPADR2 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.