Correlation Between CSL and HAVN Life
Can any of the company-specific risk be diversified away by investing in both CSL and HAVN Life 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 HAVN Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CSL and HAVN Life Sciences, you can compare the effects of market volatilities on CSL and HAVN Life 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 HAVN Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and HAVN Life.
Diversification Opportunities for CSL and HAVN Life
Pay attention - limited upside
The 3 months correlation between CSL and HAVN is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding CSL and HAVN Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HAVN Life Sciences 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 HAVN Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HAVN Life Sciences has no effect on the direction of CSL i.e., CSL and HAVN Life go up and down completely randomly.
Pair Corralation between CSL and HAVN Life
Assuming the 90 days horizon CSL is expected to generate 317.11 times less return on investment than HAVN Life. But when comparing it to its historical volatility, CSL is 71.13 times less risky than HAVN Life. It trades about 0.03 of its potential returns per unit of risk. HAVN Life Sciences is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 3.10 in HAVN Life Sciences on September 2, 2024 and sell it today you would lose (2.58) from holding HAVN Life Sciences or give up 83.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.6% |
| Values | Daily Returns |
CSL vs. HAVN Life Sciences
Performance |
| Timeline |
| CSL |
| HAVN Life Sciences |
CSL and HAVN Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CSL and HAVN Life
The main advantage of trading using opposite CSL and HAVN Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, HAVN Life 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 HAVN Life will offset losses from the drop in HAVN Life's long position.The idea behind CSL and HAVN Life Sciences 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.| HAVN Life vs. Rigel Pharmaceuticals | HAVN Life vs. Geron | HAVN Life vs. Verastem | HAVN Life vs. Immutep Ltd ADR |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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