Correlation Between Vg Life and CSL

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

By analyzing existing cross correlation between Vg Life Sciences and CSL Limited, you can compare the effects of market volatilities on Vg Life 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 Vg Life with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vg Life and CSL.

Diversification Opportunities for Vg Life and CSL

-0.18

Correlation Coefficient

Vg Life  CSL

Good diversification

The 3 months correlation between VGLS and CSL is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Vg Life Sciences and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Vg Life 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 Vg Life Sciences 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 Limited has no effect on the direction of Vg Life i.e., Vg Life and CSL go up and down completely randomly.

Pair Corralation between Vg Life and CSL

Given the investment horizon of 90 days Vg Life Sciences is expected to generate 107.83 times more return on investment than CSL. However, Vg Life is 107.83 times more volatile than CSL Limited. It trades about 0.19 of its potential returns per unit of risk. CSL Limited is currently generating about -0.06 per unit of risk. If you would invest  0.01  in Vg Life Sciences on September 5, 2024 and sell it today you would earn a total of  0.00  from holding Vg Life Sciences or generate 0.0% return on investment over 90 days.

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

Vg Life Sciences  vs.  CSL Limited

Vg Life Sciences

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vg Life Sciences are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak essential indicators, Vg Life unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 latest uncertain performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Vg Life and CSL

The main advantage of trading using opposite Vg Life and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vg Life 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.

The idea behind Vg Life Sciences and CSL Limited 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.