Correlation Between Csl and Axcella Health

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Can any of the company-specific risk be diversified away by investing in both Csl and Axcella Health 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 Axcella Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Csl Ltd ADR and Axcella Health, you can compare the effects of market volatilities on Csl and Axcella Health 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 Axcella Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Csl and Axcella Health.

Diversification Opportunities for Csl and Axcella Health

0.49
  Correlation Coefficient

Very weak diversification

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

Pair Corralation between Csl and Axcella Health

Assuming the 90 days horizon Csl Ltd ADR is expected to generate 0.13 times more return on investment than Axcella Health. However, Csl Ltd ADR is 7.78 times less risky than Axcella Health. It trades about -0.37 of its potential returns per unit of risk. Axcella Health is currently generating about -0.14 per unit of risk. If you would invest  10,107  in Csl Ltd ADR on June 27, 2022 and sell it today you would lose (1,056)  from holding Csl Ltd ADR or give up 10.45% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy95.45%
ValuesDaily Returns

Csl Ltd ADR  vs.  Axcella Health

 Performance (%) 
       Timeline  
Csl Ltd ADR 
Csl Performance
0 of 100
Over the last 90 days Csl Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong essential indicators, Csl is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Csl Price Channel

Axcella Health 
Axcella Performance
0 of 100
Over the last 90 days Axcella Health has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Axcella Health is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Axcella Price Channel

Csl and Axcella Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Csl and Axcella Health

The main advantage of trading using opposite Csl and Axcella Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Csl position performs unexpectedly, Axcella Health 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 Axcella Health will offset losses from the drop in Axcella Health's long position.
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The idea behind Csl Ltd ADR and Axcella Health 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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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.

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