Correlation Between CSL and IBEX Technologies

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

By analyzing existing cross correlation between CSL LTD SPONADR and IBEX Technologies, you can compare the effects of market volatilities on CSL and IBEX Technologies 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 IBEX Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of CSL and IBEX Technologies.

Diversification Opportunities for CSL and IBEX Technologies

-0.21

Correlation Coefficient

CSL  IBEX Technologies

Very good diversification

The 3 months correlation between CSL and IBEX is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding CSL LTD SPONADR and IBEX Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IBEX Technologies 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 LTD SPONADR are associated (or correlated) with IBEX Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IBEX Technologies has no effect on the direction of CSL i.e., CSL and IBEX Technologies go up and down completely randomly.

Pair Corralation between CSL and IBEX Technologies

Assuming the 90 days trading horizon CSL LTD SPONADR is expected to under-perform the IBEX Technologies. But the stock apears to be less risky and, when comparing its historical volatility, CSL LTD SPONADR is 1.02 times less risky than IBEX Technologies. The stock trades about -0.07 of its potential returns per unit of risk. The IBEX Technologies is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  67,800  in IBEX Technologies on September 22, 2024 and sell it today you would earn a total of  600.00  from holding IBEX Technologies or generate 0.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CSL LTD SPONADR  vs.  IBEX Technologies

CSL LTD SPONADR

Risk-Adjusted Performance

0 of 100

Very Weak

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

IBEX Technologies

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IBEX Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, IBEX Technologies is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CSL and IBEX Technologies

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

The idea behind CSL LTD SPONADR and IBEX Technologies 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.