Correlation Between CSL and Brainstorm Cell

Can any of the company-specific risk be diversified away by investing in both CSL and Brainstorm Cell 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 Brainstorm Cell into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CSL Limited and Brainstorm Cell Therapeutics, you can compare the effects of market volatilities on CSL and Brainstorm Cell 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 Brainstorm Cell. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and Brainstorm Cell.

Diversification Opportunities for CSL and Brainstorm Cell

0.49

Correlation Coefficient

CSL  Brainstorm Cell

Very weak diversification

The 3 months correlation between CSL and Brainstorm is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and Brainstorm Cell Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brainstorm Cell Ther 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 Limited are associated (or correlated) with Brainstorm Cell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brainstorm Cell Ther has no effect on the direction of CSL i.e., CSL and Brainstorm Cell go up and down completely randomly.

Pair Corralation between CSL and Brainstorm Cell

Assuming the 90 days horizon CSL Limited is expected to generate 0.15 times more return on investment than Brainstorm Cell. However, CSL Limited is 6.85 times less risky than Brainstorm Cell. It trades about 0.0 of its potential returns per unit of risk. Brainstorm Cell Therapeutics is currently generating about 0.0 per unit of risk. If you would invest  17,494  in CSL Limited on September 23, 2024 and sell it today you would lose (850.00) from holding CSL Limited or give up 4.86% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.04%
Values	Daily Returns

CSL Limited  vs.  Brainstorm Cell Therapeutics

CSL Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CSL is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Brainstorm Cell Ther

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Brainstorm Cell Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CSL and Brainstorm Cell

The main advantage of trading using opposite CSL and Brainstorm Cell positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CSL position performs unexpectedly, Brainstorm Cell 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 Brainstorm Cell will offset losses from the drop in Brainstorm Cell's long position.

The idea behind CSL Limited and Brainstorm Cell Therapeutics 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.

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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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.