Correlation Between CSL and MedMira

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

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

Diversification Opportunities for CSL and MedMira

-0.01

Correlation Coefficient

CSL  MedMira

Good diversification

The 3 months correlation between CSL and MedMira is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and MedMira in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MedMira 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 Limited are associated (or correlated) with MedMira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MedMira has no effect on the direction of CSL i.e., CSL and MedMira go up and down completely randomly.

Pair Corralation between CSL and MedMira

Assuming the 90 days horizon CSL Limited is expected to generate 0.33 times more return on investment than MedMira. However, CSL Limited is 3.05 times less risky than MedMira. It trades about 0.07 of its potential returns per unit of risk. MedMira is currently generating about -0.04 per unit of risk. If you would invest  13,470  in CSL Limited on April 23, 2025 and sell it today you would earn a total of  822.00  from holding CSL Limited or generate 6.1% return on investment over 90 days.

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

CSL Limited  vs.  MedMira

CSL Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

MedMira

Risk-Adjusted Performance

Very Weak

Over the last 90 days MedMira has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with CSL and MedMira

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

The idea behind CSL Limited and MedMira 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.

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 the Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.