Correlation Between CSE Global and Formula Systems

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

By analyzing existing cross correlation between CSE Global Limited and Formula Systems 1985, you can compare the effects of market volatilities on CSE Global and Formula Systems 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 CSE Global with a short position of Formula Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSE Global and Formula Systems.

Diversification Opportunities for CSE Global and Formula Systems

0.69

Correlation Coefficient

CSE Global  Formula Systems

Poor diversification

The 3 months correlation between CSE and Formula is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding CSE Global Limited and Formula Systems 1985 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Formula Systems 1985 and CSE Global 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 CSE Global Limited are associated (or correlated) with Formula Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Formula Systems 1985 has no effect on the direction of CSE Global i.e., CSE Global and Formula Systems go up and down completely randomly.

Pair Corralation between CSE Global and Formula Systems

Assuming the 90 days horizon CSE Global Limited is expected to generate 1.46 times more return on investment than Formula Systems. However, CSE Global is 1.46 times more volatile than Formula Systems 1985. It trades about 0.12 of its potential returns per unit of risk. Formula Systems 1985 is currently generating about 0.14 per unit of risk. If you would invest  37.00  in CSE Global Limited on May 27, 2025 and sell it today you would earn a total of  16.00  from holding CSE Global Limited or generate 43.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	87.1%
Values	Daily Returns

CSE Global Limited  vs.  Formula Systems 1985

CSE Global Limited

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in CSE Global Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, CSE Global reported solid returns over the last few months and may actually be approaching a breakup point.

Formula Systems 1985

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Formula Systems 1985 are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain basic indicators, Formula Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSE Global and Formula Systems

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

The idea behind CSE Global Limited and Formula Systems 1985 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.