Correlation Between CSL and Amarin PLC

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

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

Diversification Opportunities for CSL and Amarin PLC

0.42

Correlation Coefficient

CSL  Amarin PLC

Very weak diversification

The 3 months correlation between CSL and Amarin is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Amarin PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amarin PLC 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 are associated (or correlated) with Amarin PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amarin PLC has no effect on the direction of CSL i.e., CSL and Amarin PLC go up and down completely randomly.

Pair Corralation between CSL and Amarin PLC

Assuming the 90 days horizon CSL is expected to generate 3.45 times less return on investment than Amarin PLC. But when comparing it to its historical volatility, CSL is 2.97 times less risky than Amarin PLC. It trades about 0.14 of its potential returns per unit of risk. Amarin PLC is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1,090  in Amarin PLC on May 19, 2025 and sell it today you would earn a total of  475.00  from holding Amarin PLC or generate 43.58% return on investment over 90 days.

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

CSL  vs.  Amarin PLC

CSL

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CSL are ranked lower than 10 (%) 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.

Amarin PLC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Amarin PLC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Amarin PLC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and Amarin PLC

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

The idea behind CSL and Amarin PLC 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.