Correlation Between Cosmo Metals and Australian Unity
Can any of the company-specific risk be diversified away by investing in both Cosmo Metals and Australian Unity 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 Australian Unity into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmo Metals and Australian Unity Office, you can compare the effects of market volatilities on Cosmo Metals and Australian Unity 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 Australian Unity. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmo Metals and Australian Unity.
Diversification Opportunities for Cosmo Metals and Australian Unity
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cosmo and Australian is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Australian Unity Office in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Unity Office 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 Australian Unity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Unity Office has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Australian Unity go up and down completely randomly.
Pair Corralation between Cosmo Metals and Australian Unity
Assuming the 90 days trading horizon Cosmo Metals is expected to generate 9.57 times more return on investment than Australian Unity. However, Cosmo Metals is 9.57 times more volatile than Australian Unity Office. It trades about 0.13 of its potential returns per unit of risk. Australian Unity Office is currently generating about 0.39 per unit of risk. If you would invest 1.80 in Cosmo Metals on October 10, 2024 and sell it today you would earn a total of 0.20 from holding Cosmo Metals or generate 11.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmo Metals vs. Australian Unity Office
Performance |
| Timeline |
| Cosmo Metals |
| Australian Unity Office |
Cosmo Metals and Australian Unity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmo Metals and Australian Unity
The main advantage of trading using opposite Cosmo Metals and Australian Unity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmo Metals position performs unexpectedly, Australian Unity 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 Australian Unity will offset losses from the drop in Australian Unity's long position.| Cosmo Metals vs. Northern Star Resources | Cosmo Metals vs. Evolution Mining | Cosmo Metals vs. Bluescope Steel | Cosmo Metals vs. De Grey Mining |
| Australian Unity vs. Mount Gibson Iron | Australian Unity vs. Vulcan Steel | Australian Unity vs. Macquarie Bank Limited | Australian Unity vs. Kkr Credit Income |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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