Correlation Between TELECOM ITALRISP and CSL

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

By analyzing existing cross correlation between TELECOM ITALRISP ADR10 and CSL Limited, you can compare the effects of market volatilities on TELECOM ITALRISP 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 TELECOM ITALRISP with a short position of CSL. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELECOM ITALRISP and CSL.

Diversification Opportunities for TELECOM ITALRISP and CSL

-0.34

Correlation Coefficient

TELECOM ITALRISP  CSL

Very good diversification

The 3 months correlation between TELECOM and CSL is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding TELECOM ITALRISP ADR10 and CSL Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CSL Limited and TELECOM ITALRISP 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 TELECOM ITALRISP ADR10 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 TELECOM ITALRISP i.e., TELECOM ITALRISP and CSL go up and down completely randomly.

Pair Corralation between TELECOM ITALRISP and CSL

Assuming the 90 days trading horizon TELECOM ITALRISP ADR10 is expected to generate 1.1 times more return on investment than CSL. However, TELECOM ITALRISP is 1.1 times more volatile than CSL Limited. It trades about 0.21 of its potential returns per unit of risk. CSL Limited is currently generating about 0.08 per unit of risk. If you would invest  354.00  in TELECOM ITALRISP ADR10 on April 21, 2025 and sell it today you would earn a total of  86.00  from holding TELECOM ITALRISP ADR10 or generate 24.29% return on investment over 90 days.

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

TELECOM ITALRISP ADR10  vs.  CSL Limited

TELECOM ITALRISP ADR10

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TELECOM ITALRISP ADR10 are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile forward indicators, TELECOM ITALRISP reported 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 fragile basic indicators, CSL may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with TELECOM ITALRISP and CSL

The main advantage of trading using opposite TELECOM ITALRISP and CSL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TELECOM ITALRISP 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 TELECOM ITALRISP ADR10 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.