Correlation Between Hemisphere Energy and CSL

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

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

Diversification Opportunities for Hemisphere Energy and CSL

-0.33

Correlation Coefficient

Hemisphere Energy  CSL

Very good diversification

The 3 months correlation between Hemisphere and CSL is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Hemisphere Energy Corp and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and Hemisphere Energy 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 Hemisphere Energy Corp 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 Limited has no effect on the direction of Hemisphere Energy i.e., Hemisphere Energy and CSL go up and down completely randomly.

Pair Corralation between Hemisphere Energy and CSL

Assuming the 90 days trading horizon Hemisphere Energy Corp is expected to generate 1.36 times more return on investment than CSL. However, Hemisphere Energy is 1.36 times more volatile than CSL Limited. It trades about 0.1 of its potential returns per unit of risk. CSL Limited is currently generating about 0.08 per unit of risk. If you would invest  105.00  in Hemisphere Energy Corp on April 20, 2025 and sell it today you would earn a total of  14.00  from holding Hemisphere Energy Corp or generate 13.33% return on investment over 90 days.

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

Hemisphere Energy Corp  vs.  CSL Limited

Hemisphere Energy Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Hemisphere Energy Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Hemisphere Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

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 uncertain basic indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Hemisphere Energy and CSL

The main advantage of trading using opposite Hemisphere Energy and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hemisphere Energy 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 Hemisphere Energy Corp and CSL Limited 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.