Correlation Between CSL and Singular Health

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

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

Diversification Opportunities for CSL and Singular Health

-0.6

Correlation Coefficient

CSL  Singular Health

Excellent diversification

The 3 months correlation between CSL and Singular is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding CSL and Singular Health Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singular Health Group 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 are associated (or correlated) with Singular Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singular Health Group has no effect on the direction of CSL i.e., CSL and Singular Health go up and down completely randomly.

Pair Corralation between CSL and Singular Health

Assuming the 90 days trading horizon CSL is expected to under-perform the Singular Health. But the stock apears to be less risky and, when comparing its historical volatility, CSL is 5.62 times less risky than Singular Health. The stock trades about -0.16 of its potential returns per unit of risk. The Singular Health Group is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  8.70  in Singular Health Group on August 29, 2024 and sell it today you would earn a total of  3.30  from holding Singular Health Group or generate 37.93% return on investment over 90 days.

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

CSL  vs.  Singular Health Group

CSL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CSL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's essential indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Singular Health Group

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Singular Health Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak technical and fundamental indicators, Singular Health unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CSL and Singular Health

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

The idea behind CSL and Singular Health Group 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 Transaction History module to view history of all your transactions and understand their impact on performance.