Correlation Between S-E BANKEN and CSL

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

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

Diversification Opportunities for S-E BANKEN and CSL

-0.04

Correlation Coefficient

S-E BANKEN  CSL

Good diversification

The 3 months correlation between S-E and CSL is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding S E BANKEN A and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and S-E BANKEN 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 S E BANKEN A 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 S-E BANKEN i.e., S-E BANKEN and CSL go up and down completely randomly.

Pair Corralation between S-E BANKEN and CSL

Assuming the 90 days trading horizon S E BANKEN A is expected to generate 0.72 times more return on investment than CSL. However, S E BANKEN A is 1.38 times less risky than CSL. It trades about 0.14 of its potential returns per unit of risk. CSL Limited is currently generating about 0.07 per unit of risk. If you would invest  1,363  in S E BANKEN A on April 25, 2025 and sell it today you would earn a total of  141.00  from holding S E BANKEN A or generate 10.34% return on investment over 90 days.

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

S E BANKEN A   vs.  CSL Limited

S E BANKEN

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in S E BANKEN A are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, S-E BANKEN may actually be approaching a critical reversion point that can send shares even higher in August 2025.

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

Pair Trading with S-E BANKEN and CSL

The main advantage of trading using opposite S-E BANKEN and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S-E BANKEN 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 S E BANKEN A 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.