Correlation Between CSL and ANGANG STEEL

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

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

Diversification Opportunities for CSL and ANGANG STEEL

0.04

Correlation Coefficient

CSL  ANGANG STEEL

Significant diversification

The 3 months correlation between CSL and ANGANG is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding CSL Limited and ANGANG STEEL H in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANGANG STEEL H 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 ANGANG STEEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANGANG STEEL H has no effect on the direction of CSL i.e., CSL and ANGANG STEEL go up and down completely randomly.

Pair Corralation between CSL and ANGANG STEEL

Assuming the 90 days horizon CSL is expected to generate 4.69 times less return on investment than ANGANG STEEL. But when comparing it to its historical volatility, CSL Limited is 2.98 times less risky than ANGANG STEEL. It trades about 0.08 of its potential returns per unit of risk. ANGANG STEEL H is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  16.00  in ANGANG STEEL H on April 21, 2025 and sell it today you would earn a total of  6.00  from holding ANGANG STEEL H or generate 37.5% return on investment over 90 days.

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

CSL Limited  vs.  ANGANG STEEL H

CSL Limited

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CSL Limited are ranked lower than 6 (%) 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.

ANGANG STEEL H

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in ANGANG STEEL H are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ANGANG STEEL unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and ANGANG STEEL

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

The idea behind CSL Limited and ANGANG STEEL H 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.