Correlation Between CSL and Aurizon Holdings
Can any of the company-specific risk be diversified away by investing in both CSL and Aurizon Holdings 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 CSL and Aurizon Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Aurizon Holdings, you can compare the effects of market volatilities on CSL and Aurizon Holdings 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 CSL with a short position of Aurizon Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Aurizon Holdings.
Diversification Opportunities for CSL and Aurizon Holdings
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between CSL and Aurizon is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Aurizon Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurizon Holdings and CSL 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 CSL are associated (or correlated) with Aurizon Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurizon Holdings has no effect on the direction of CSL i.e., CSL and Aurizon Holdings go up and down completely randomly.
Pair Corralation between CSL and Aurizon Holdings
Assuming the 90 days trading horizon CSL is expected to under-perform the Aurizon Holdings. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 1.1 times less risky than Aurizon Holdings. The stock trades about 0.0 of its potential returns per unit of risk. The Aurizon Holdings is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 335.00 in Aurizon Holdings on August 24, 2024 and sell it today you would earn a total of 5.00 from holding Aurizon Holdings or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Aurizon Holdings
Performance |
| Timeline |
| CSL |
| Aurizon Holdings |
CSL and Aurizon Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Aurizon Holdings
The main advantage of trading using opposite CSL and Aurizon Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Aurizon Holdings 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 Aurizon Holdings will offset losses from the drop in Aurizon Holdings' long position.The idea behind CSL and Aurizon Holdings 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.| Aurizon Holdings vs. Pinnacle Investment Management | Aurizon Holdings vs. Centaurus Metals | Aurizon Holdings vs. Stelar Metals | Aurizon Holdings vs. Hotel Property Investments |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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