Correlation Between Ribbon Communications and CSL

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

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

Diversification Opportunities for Ribbon Communications and CSL

-0.18

Correlation Coefficient

Ribbon Communications  CSL

Good diversification

The 3 months correlation between Ribbon and CSL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ribbon Communications and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Ribbon Communications 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 Ribbon Communications 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 Limited has no effect on the direction of Ribbon Communications i.e., Ribbon Communications and CSL go up and down completely randomly.

Pair Corralation between Ribbon Communications and CSL

Assuming the 90 days trading horizon Ribbon Communications is expected to under-perform the CSL. In addition to that, Ribbon Communications is 1.95 times more volatile than CSL Limited. It trades about -0.08 of its total potential returns per unit of risk. CSL Limited is currently generating about 0.43 per unit of volatility. If you would invest  13,168  in CSL Limited on May 3, 2025 and sell it today you would earn a total of  1,952  from holding CSL Limited or generate 14.82% return on investment over 90 days.

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

Ribbon Communications  vs.  CSL Limited

Ribbon Communications

Risk-Adjusted Performance

OK

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

CSL Limited

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CSL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Ribbon Communications and CSL

The main advantage of trading using opposite Ribbon Communications and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ribbon Communications 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 Ribbon Communications and CSL Limited 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.