Correlation Between Cosmos Technology and Sime Darby
Can any of the company-specific risk be diversified away by investing in both Cosmos Technology and Sime Darby 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 Cosmos Technology and Sime Darby into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos Technology International and Sime Darby Plantation, you can compare the effects of market volatilities on Cosmos Technology and Sime Darby 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 Cosmos Technology with a short position of Sime Darby. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos Technology and Sime Darby.
Diversification Opportunities for Cosmos Technology and Sime Darby
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cosmos and Sime is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Technology Internationa and Sime Darby Plantation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sime Darby Plantation and Cosmos Technology 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 Cosmos Technology International are associated (or correlated) with Sime Darby. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sime Darby Plantation has no effect on the direction of Cosmos Technology i.e., Cosmos Technology and Sime Darby go up and down completely randomly.
Pair Corralation between Cosmos Technology and Sime Darby
Assuming the 90 days trading horizon Cosmos Technology International is expected to under-perform the Sime Darby. In addition to that, Cosmos Technology is 2.01 times more volatile than Sime Darby Plantation. It trades about -0.02 of its total potential returns per unit of risk. Sime Darby Plantation is currently generating about 0.03 per unit of volatility. If you would invest 415.00 in Sime Darby Plantation on September 12, 2024 and sell it today you would earn a total of 87.00 from holding Sime Darby Plantation or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmos Technology Internationa vs. Sime Darby Plantation
Performance |
| Timeline |
| Cosmos Technology |
| Sime Darby Plantation |
Cosmos Technology and Sime Darby Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmos Technology and Sime Darby
The main advantage of trading using opposite Cosmos Technology and Sime Darby positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos Technology position performs unexpectedly, Sime Darby 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 Sime Darby will offset losses from the drop in Sime Darby's long position.| Cosmos Technology vs. Malayan Banking Bhd | Cosmos Technology vs. Public Bank Bhd | Cosmos Technology vs. Petronas Chemicals Group | Cosmos Technology vs. Tenaga Nasional Bhd |
| Sime Darby vs. PMB Technology Bhd | Sime Darby vs. ES Ceramics Technology | Sime Darby vs. Magni Tech Industries | Sime Darby vs. Computer Forms Bhd |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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