Correlation Between Microchip Technology and CSL

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

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

Diversification Opportunities for Microchip Technology and CSL

-0.15

Correlation Coefficient

Microchip Technology  CSL

Good diversification

The 3 months correlation between Microchip and CSL is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Microchip Technology Incorpora and CSL LTD SPONADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL LTD SPONADR and Microchip Technology 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 Microchip Technology Incorporated 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 LTD SPONADR has no effect on the direction of Microchip Technology i.e., Microchip Technology and CSL go up and down completely randomly.

Pair Corralation between Microchip Technology and CSL

Assuming the 90 days horizon Microchip Technology Incorporated is expected to generate 1.07 times more return on investment than CSL. However, Microchip Technology is 1.07 times more volatile than CSL LTD SPONADR. It trades about 0.09 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about -0.09 per unit of risk. If you would invest  4,943  in Microchip Technology Incorporated on May 26, 2025 and sell it today you would earn a total of  696.00  from holding Microchip Technology Incorporated or generate 14.08% return on investment over 90 days.

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

Microchip Technology Incorpora  vs.  CSL LTD SPONADR

Microchip Technology

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Microchip Technology Incorporated are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Microchip Technology reported solid returns over the last few months and may actually be approaching a breakup point.

CSL LTD SPONADR

Risk-Adjusted Performance

Weakest

Over the last 90 days CSL LTD SPONADR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking indicators remain nearly stable which may send shares a bit higher in September 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Microchip Technology and CSL

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