Correlation Between Beam TherapeuticsInc and CSL

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

Diversification Opportunities for Beam TherapeuticsInc and CSL

-0.65
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Beam and CSL is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Beam TherapeuticsInc and CSL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL and Beam TherapeuticsInc 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 Beam TherapeuticsInc 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 has no effect on the direction of Beam TherapeuticsInc i.e., Beam TherapeuticsInc and CSL go up and down completely randomly.

Pair Corralation between Beam TherapeuticsInc and CSL

Given the investment horizon of 90 days Beam TherapeuticsInc is expected to under-perform the CSL. In addition to that, Beam TherapeuticsInc is 3.67 times more volatile than CSL. It trades about -0.4 of its total potential returns per unit of risk. CSL is currently generating about 0.08 per unit of volatility. If you would invest  9,287  in CSL on December 29, 2023 and sell it today you would earn a total of  142.00  from holding CSL or generate 1.53% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Beam TherapeuticsInc  vs.  CSL

 Performance 
       Timeline  
Beam TherapeuticsInc 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Beam TherapeuticsInc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Beam TherapeuticsInc displayed solid returns over the last few months and may actually be approaching a breakup point.
CSL 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Very Weak
Over the last 90 days CSL 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 recent stock price disturbance, may contribute to short-term losses for the investors.

Beam TherapeuticsInc and CSL Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Beam TherapeuticsInc and CSL

The main advantage of trading using opposite Beam TherapeuticsInc and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Beam TherapeuticsInc 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 Beam TherapeuticsInc and CSL 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 Commodity Directory module to find actively traded commodities issued by global exchanges.

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