Correlation Between Light Wonder and CSL
Can any of the company-specific risk be diversified away by investing in both Light Wonder 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 Light Wonder and CSL into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Light Wonder and CSL, you can compare the effects of market volatilities on Light Wonder 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 Light Wonder with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Light Wonder and CSL.
Diversification Opportunities for Light Wonder and CSL
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Light and CSL is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Light Wonder and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Light Wonder 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 Light Wonder 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 Light Wonder i.e., Light Wonder and CSL go up and down completely randomly.
Pair Corralation between Light Wonder and CSL
Assuming the 90 days trading horizon Light Wonder is expected to generate 1.97 times more return on investment than CSL. However, Light Wonder is 1.97 times more volatile than CSL. It trades about 0.07 of its potential returns per unit of risk. CSL is currently generating about 0.02 per unit of risk. If you would invest 9,100 in Light Wonder on August 31, 2024 and sell it today you would earn a total of 5,713 from holding Light Wonder or generate 62.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 80.46% |
| Values | Daily Returns |
Light Wonder vs. CSL
Performance |
| Timeline |
| Light Wonder |
| CSL |
Light Wonder and CSL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Light Wonder and CSL
The main advantage of trading using opposite Light Wonder and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Light Wonder 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.| Light Wonder vs. Hawsons Iron | Light Wonder vs. Spirit Telecom | Light Wonder vs. TPG Telecom | Light Wonder vs. The Environmental Group |
| CSL vs. MA Financial Group | CSL vs. Qbe Insurance Group | CSL vs. Kkr Credit Income | CSL vs. Prime Financial 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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