Correlation Between Bionomics and CSL
Can any of the company-specific risk be diversified away by investing in both Bionomics 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 Bionomics and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bionomics Limited and CSL, you can compare the effects of market volatilities on Bionomics 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 Bionomics with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bionomics and CSL.
Diversification Opportunities for Bionomics and CSL
Modest diversification
The 3 months correlation between Bionomics and CSL is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Bionomics Limited and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Bionomics 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 Bionomics Limited 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 has no effect on the direction of Bionomics i.e., Bionomics and CSL go up and down completely randomly.
Pair Corralation between Bionomics and CSL
Assuming the 90 days horizon Bionomics Limited is expected to generate 32.55 times more return on investment than CSL. However, Bionomics is 32.55 times more volatile than CSL. It trades about 0.14 of its potential returns per unit of risk. CSL is currently generating about -0.01 per unit of risk. If you would invest 1.27 in Bionomics Limited on September 1, 2024 and sell it today you would earn a total of 0.04 from holding Bionomics Limited or generate 3.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 24.84% |
| Values | Daily Returns |
Bionomics Limited vs. CSL
Performance |
| Timeline |
| Bionomics Limited |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CSL |
Bionomics and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bionomics and CSL
The main advantage of trading using opposite Bionomics and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bionomics 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.| Bionomics vs. BetterLife Pharma | Bionomics vs. Entheon Biomedical Corp | Bionomics vs. Pharmather Holdings | Bionomics vs. Intelgenx Technologs |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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