Correlation Between Focus Home and CSL
Can any of the company-specific risk be diversified away by investing in both Focus Home 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 Focus Home and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Focus Home Interactive and CSL LTD SPONADR, you can compare the effects of market volatilities on Focus Home 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 Focus Home with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Focus Home and CSL.
Diversification Opportunities for Focus Home and CSL
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Focus and CSL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Focus Home Interactive 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 Focus Home 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 Focus Home Interactive 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 Focus Home i.e., Focus Home and CSL go up and down completely randomly.
Pair Corralation between Focus Home and CSL
Assuming the 90 days horizon Focus Home Interactive is expected to generate 3.33 times more return on investment than CSL. However, Focus Home is 3.33 times more volatile than CSL LTD SPONADR. It trades about 0.03 of its potential returns per unit of risk. CSL LTD SPONADR is currently generating about -0.03 per unit of risk. If you would invest 1,572 in Focus Home Interactive on December 12, 2024 and sell it today you would earn a total of 178.00 from holding Focus Home Interactive or generate 11.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Focus Home Interactive vs. CSL LTD SPONADR
Performance |
| Timeline |
| Focus Home Interactive |
| CSL LTD SPONADR |
Focus Home and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Focus Home and CSL
The main advantage of trading using opposite Focus Home and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Focus Home 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.| Focus Home vs. United States Steel | ||
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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