Correlation Between Cosmo Metals and Red Hill
Can any of the company-specific risk be diversified away by investing in both Cosmo Metals and Red Hill 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 Red Hill into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmo Metals and Red Hill Iron, you can compare the effects of market volatilities on Cosmo Metals and Red Hill 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 Red Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmo Metals and Red Hill.
Diversification Opportunities for Cosmo Metals and Red Hill
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cosmo and Red is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Red Hill Iron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Hill Iron 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 Red Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Hill Iron has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Red Hill go up and down completely randomly.
Pair Corralation between Cosmo Metals and Red Hill
Assuming the 90 days trading horizon Cosmo Metals is expected to under-perform the Red Hill. In addition to that, Cosmo Metals is 1.77 times more volatile than Red Hill Iron. It trades about -0.32 of its total potential returns per unit of risk. Red Hill Iron is currently generating about -0.04 per unit of volatility. If you would invest 413.00 in Red Hill Iron on October 24, 2024 and sell it today you would lose (5.00) from holding Red Hill Iron or give up 1.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmo Metals vs. Red Hill Iron
Performance |
| Timeline |
| Cosmo Metals |
| Red Hill Iron |
Cosmo Metals and Red Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmo Metals and Red Hill
The main advantage of trading using opposite Cosmo Metals and Red Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmo Metals position performs unexpectedly, Red Hill 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 Red Hill will offset losses from the drop in Red Hill's long position.| Cosmo Metals vs. Liberty Financial Group | Cosmo Metals vs. Ora Banda Mining | Cosmo Metals vs. Auswide Bank | Cosmo Metals vs. Kkr Credit Income |
| Red Hill vs. Argo Investments | Red Hill vs. Clime Investment Management | Red Hill vs. Navigator Global Investments | Red Hill vs. Diversified United Investment |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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