Correlation Between LEGACY IRON and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both LEGACY IRON 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 LEGACY IRON and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LEGACY IRON ORE and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on LEGACY IRON 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 LEGACY IRON with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of LEGACY IRON and CosmoSteel Holdings.
Diversification Opportunities for LEGACY IRON and CosmoSteel Holdings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between LEGACY and CosmoSteel is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding LEGACY IRON ORE and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and LEGACY IRON 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 LEGACY IRON ORE 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 LEGACY IRON i.e., LEGACY IRON and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between LEGACY IRON and CosmoSteel Holdings
Assuming the 90 days trading horizon LEGACY IRON ORE is expected to under-perform the CosmoSteel Holdings. But the stock apears to be less risky and, when comparing its historical volatility, LEGACY IRON ORE is 1.3 times less risky than CosmoSteel Holdings. The stock trades about -0.21 of its potential returns per unit of risk. The CosmoSteel Holdings Limited is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest 6.50 in CosmoSteel Holdings Limited on August 25, 2024 and sell it today you would lose (0.45) from holding CosmoSteel Holdings Limited or give up 6.92% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LEGACY IRON ORE vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| LEGACY IRON ORE |
| CosmoSteel Holdings |
LEGACY IRON and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LEGACY IRON and CosmoSteel Holdings
The main advantage of trading using opposite LEGACY IRON and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LEGACY IRON 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.| LEGACY IRON vs. Insteel Industries | LEGACY IRON vs. Boiron SA | LEGACY IRON vs. SBM OFFSHORE | LEGACY IRON vs. Nippon Steel |
| CosmoSteel Holdings vs. RETAIL FOOD GROUP | CosmoSteel Holdings vs. QURATE RETAIL INC | CosmoSteel Holdings vs. Daito Trust Construction | CosmoSteel Holdings vs. BJs Wholesale Club |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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