Correlation Between Csl and Mustang Bio

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Can any of the company-specific risk be diversified away by investing in both Csl and Mustang Bio 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 Mustang Bio 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 Mustang Bio, you can compare the effects of market volatilities on Csl and Mustang Bio 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 Mustang Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Csl and Mustang Bio.

Diversification Opportunities for Csl and Mustang Bio

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Csl and Mustang is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Csl Ltd ADR and Mustang Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mustang Bio 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 Mustang Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mustang Bio has no effect on the direction of Csl i.e., Csl and Mustang Bio go up and down completely randomly.

Pair Corralation between Csl and Mustang Bio

Assuming the 90 days horizon Csl Ltd ADR is expected to generate 0.31 times more return on investment than Mustang Bio. However, Csl Ltd ADR is 3.19 times less risky than Mustang Bio. It trades about -0.3 of its potential returns per unit of risk. Mustang Bio is currently generating about -0.21 per unit of risk. If you would invest  10,031  in Csl Ltd ADR on July 3, 2022 and sell it today you would lose (906.00)  from holding Csl Ltd ADR or give up 9.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy95.45%
ValuesDaily Returns

Csl Ltd ADR  vs.  Mustang Bio

 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

Mustang Bio 
Mustang Performance
0 of 100
Over the last 90 days Mustang Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unfluctuating performance, the Stock's forward indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Mustang Price Channel

Csl and Mustang Bio Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Csl and Mustang Bio

The main advantage of trading using opposite Csl and Mustang Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Csl position performs unexpectedly, Mustang Bio 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 Mustang Bio will offset losses from the drop in Mustang Bio's long position.
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The idea behind Csl Ltd ADR and Mustang Bio 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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