Correlation Between Superior Plus and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both Superior Plus and CosmoSteel Holdings 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 Superior Plus and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Superior Plus and CosmoSteel Holdings 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 Superior Plus with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and CosmoSteel Holdings.
Diversification Opportunities for Superior Plus and CosmoSteel Holdings
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Superior and CosmoSteel is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and Superior Plus 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 Superior Plus Corp are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of Superior Plus i.e., Superior Plus and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between Superior Plus and CosmoSteel Holdings
Assuming the 90 days horizon Superior Plus Corp is expected to generate 1.93 times more return on investment than CosmoSteel Holdings. However, Superior Plus is 1.93 times more volatile than CosmoSteel Holdings Limited. It trades about -0.05 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about -0.11 per unit of risk. If you would invest 460.00 in Superior Plus Corp on August 24, 2024 and sell it today you would lose (40.00) from holding Superior Plus Corp or give up 8.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Superior Plus Corp vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| Superior Plus Corp |
| CosmoSteel Holdings |
Superior Plus and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Superior Plus and CosmoSteel Holdings
The main advantage of trading using opposite Superior Plus and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.| Superior Plus vs. SBI Insurance Group | Superior Plus vs. Ping An Insurance | Superior Plus vs. Safety Insurance Group | Superior Plus vs. MSAD INSURANCE |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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