Correlation Between CSL and Oakridge International
Can any of the company-specific risk be diversified away by investing in both CSL and Oakridge International 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 Oakridge International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Oakridge International, you can compare the effects of market volatilities on CSL and Oakridge International 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 Oakridge International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Oakridge International.
Diversification Opportunities for CSL and Oakridge International
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between CSL and Oakridge is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Oakridge International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakridge International 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 Oakridge International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakridge International has no effect on the direction of CSL i.e., CSL and Oakridge International go up and down completely randomly.
Pair Corralation between CSL and Oakridge International
Assuming the 90 days trading horizon CSL is expected to generate 0.25 times more return on investment than Oakridge International. However, CSL is 4.07 times less risky than Oakridge International. It trades about -0.08 of its potential returns per unit of risk. Oakridge International is currently generating about -0.07 per unit of risk. If you would invest 28,732 in CSL on September 12, 2024 and sell it today you would lose (531.00) from holding CSL or give up 1.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Oakridge International
Performance |
| Timeline |
| CSL |
| Oakridge International |
CSL and Oakridge International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Oakridge International
The main advantage of trading using opposite CSL and Oakridge International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Oakridge International 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 Oakridge International will offset losses from the drop in Oakridge International's long position.The idea behind CSL and Oakridge International 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.| Oakridge International vs. CSL | Oakridge International vs. Tamawood | Oakridge International vs. Cochlear | Oakridge International vs. Rea Group |
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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