Correlation Between CSL and Regal Investment
Can any of the company-specific risk be diversified away by investing in both CSL and Regal Investment 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 Regal Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Regal Investment, you can compare the effects of market volatilities on CSL and Regal Investment 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 Regal Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Regal Investment.
Diversification Opportunities for CSL and Regal Investment
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between CSL and Regal is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Regal Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regal Investment 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 Regal Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regal Investment has no effect on the direction of CSL i.e., CSL and Regal Investment go up and down completely randomly.
Pair Corralation between CSL and Regal Investment
Assuming the 90 days trading horizon CSL is expected to under-perform the Regal Investment. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 1.27 times less risky than Regal Investment. The stock trades about -0.15 of its potential returns per unit of risk. The Regal Investment is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest 352.00 in Regal Investment on August 28, 2024 and sell it today you would lose (3.00) from holding Regal Investment or give up 0.85% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CSL vs. Regal Investment
Performance |
| Timeline |
| CSL |
| Regal Investment |
CSL and Regal Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Regal Investment
The main advantage of trading using opposite CSL and Regal Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Regal Investment 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 Regal Investment will offset losses from the drop in Regal Investment's long position.| CSL vs. Regal Investment | CSL vs. MFF Capital Investments | CSL vs. Mirrabooka Investments | CSL vs. Viva Leisure |
| Regal Investment vs. Autosports Group | Regal Investment vs. Srj Technologies Group | Regal Investment vs. Neurotech International | Regal Investment vs. EROAD |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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