Correlation Between CSL and Seek
Can any of the company-specific risk be diversified away by investing in both CSL and Seek 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 Seek into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and Seek, you can compare the effects of market volatilities on CSL and Seek 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 Seek. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Seek.
Diversification Opportunities for CSL and Seek
Pay attention - limited upside
The 3 months correlation between CSL and Seek is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Seek in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Seek 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 Seek. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Seek has no effect on the direction of CSL i.e., CSL and Seek go up and down completely randomly.
Pair Corralation between CSL and Seek
Assuming the 90 days trading horizon CSL is expected to under-perform the Seek. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 1.18 times less risky than Seek. The stock trades about -0.06 of its potential returns per unit of risk. The Seek is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,494 in Seek on September 1, 2024 and sell it today you would earn a total of 135.00 from holding Seek or generate 5.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
CSL vs. Seek
Performance |
| Timeline |
| CSL |
| Seek |
CSL and Seek Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and Seek
The main advantage of trading using opposite CSL and Seek positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Seek 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 Seek will offset losses from the drop in Seek's long position.| CSL vs. Aneka Tambang Tbk | CSL vs. Commonwealth Bank | CSL vs. Commonwealth Bank of | CSL vs. Australia and New |
| Seek vs. Vulcan Steel | Seek vs. The Environmental Group | Seek vs. Autosports Group | Seek vs. Centaurus Metals |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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