Correlation Between Cosmo Metals and Stelar Metals
Can any of the company-specific risk be diversified away by investing in both Cosmo Metals and Stelar Metals 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 Stelar Metals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmo Metals and Stelar Metals, you can compare the effects of market volatilities on Cosmo Metals and Stelar Metals 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 Stelar Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmo Metals and Stelar Metals.
Diversification Opportunities for Cosmo Metals and Stelar Metals
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cosmo and Stelar is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Stelar Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stelar Metals 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 Stelar Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stelar Metals has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Stelar Metals go up and down completely randomly.
Pair Corralation between Cosmo Metals and Stelar Metals
Assuming the 90 days trading horizon Cosmo Metals is expected to under-perform the Stelar Metals. In addition to that, Cosmo Metals is 1.06 times more volatile than Stelar Metals. It trades about -0.05 of its total potential returns per unit of risk. Stelar Metals is currently generating about 0.0 per unit of volatility. If you would invest 15.00 in Stelar Metals on October 11, 2024 and sell it today you would lose (8.30) from holding Stelar Metals or give up 55.33% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cosmo Metals vs. Stelar Metals
Performance |
| Timeline |
| Cosmo Metals |
| Stelar Metals |
Cosmo Metals and Stelar Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cosmo Metals and Stelar Metals
The main advantage of trading using opposite Cosmo Metals and Stelar Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmo Metals position performs unexpectedly, Stelar Metals 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 Stelar Metals will offset losses from the drop in Stelar Metals' long position.| Cosmo Metals vs. Metro Mining | Cosmo Metals vs. Auswide Bank | Cosmo Metals vs. Sequoia Financial Group | Cosmo Metals vs. Aspire Mining |
| Stelar Metals vs. Sandon Capital Investments | Stelar Metals vs. Falcon Metals | Stelar Metals vs. Carlton Investments | Stelar Metals vs. Sky Metals |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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