Correlation Between Geron and CSL
Can any of the company-specific risk be diversified away by investing in both Geron and CSL 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 Geron and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Geron and CSL, you can compare the effects of market volatilities on Geron and CSL 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 Geron with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Geron and CSL.
Diversification Opportunities for Geron and CSL
Poor diversification
The 3 months correlation between Geron and CSL is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Geron and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Geron 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 Geron are associated (or correlated) with CSL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CSL has no effect on the direction of Geron i.e., Geron and CSL go up and down completely randomly.
Pair Corralation between Geron and CSL
Given the investment horizon of 90 days Geron is expected to generate 1.8 times more return on investment than CSL. However, Geron is 1.8 times more volatile than CSL. It trades about 0.02 of its potential returns per unit of risk. CSL is currently generating about -0.07 per unit of risk. If you would invest 411.00 in Geron on September 1, 2024 and sell it today you would earn a total of 1.00 from holding Geron or generate 0.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Geron vs. CSL
Performance |
| Timeline |
| Geron |
| CSL |
Geron and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Geron and CSL
The main advantage of trading using opposite Geron and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Geron position performs unexpectedly, CSL 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 CSL will offset losses from the drop in CSL's long position.| Geron vs. Tff Pharmaceuticals | Geron vs. Eliem Therapeutics | Geron vs. Inhibrx | Geron vs. Enliven Therapeutics |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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