Correlation Between Cosmo Metals and ARN Media
Can any of the company-specific risk be diversified away by investing in both Cosmo Metals and ARN Media 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 Cosmo Metals and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmo Metals and ARN Media Limited, you can compare the effects of market volatilities on Cosmo Metals and ARN Media 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 Cosmo Metals with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmo Metals and ARN Media.
Diversification Opportunities for Cosmo Metals and ARN Media
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cosmo and ARN is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Cosmo Metals 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 Cosmo Metals are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and ARN Media go up and down completely randomly.
Pair Corralation between Cosmo Metals and ARN Media
Assuming the 90 days trading horizon Cosmo Metals is expected to under-perform the ARN Media. In addition to that, Cosmo Metals is 1.67 times more volatile than ARN Media Limited. It trades about -0.39 of its total potential returns per unit of risk. ARN Media Limited is currently generating about -0.21 per unit of volatility. If you would invest 73.00 in ARN Media Limited on November 4, 2024 and sell it today you would lose (6.00) from holding ARN Media Limited or give up 8.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cosmo Metals vs. ARN Media Limited
Performance |
| Timeline |
| Cosmo Metals |
| ARN Media Limited |
Cosmo Metals and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmo Metals and ARN Media
The main advantage of trading using opposite Cosmo Metals and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmo Metals position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Cosmo Metals vs. Nufarm Finance NZ | Cosmo Metals vs. Charter Hall Retail | Cosmo Metals vs. Dug Technology | Cosmo Metals vs. Retail Food Group |
| ARN Media vs. Sky Metals | ARN Media vs. Aeon Metals | ARN Media vs. Black Rock Mining | ARN Media vs. Hudson Investment Group |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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