Correlation Between CosmoSteel Holdings and ANDRADA MINING
Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and ANDRADA MINING 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 CosmoSteel Holdings and ANDRADA MINING into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CosmoSteel Holdings Limited and ANDRADA MINING LTD, you can compare the effects of market volatilities on CosmoSteel Holdings and ANDRADA MINING 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 CosmoSteel Holdings with a short position of ANDRADA MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and ANDRADA MINING.
Diversification Opportunities for CosmoSteel Holdings and ANDRADA MINING
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CosmoSteel and ANDRADA is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and ANDRADA MINING LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ANDRADA MINING LTD and CosmoSteel Holdings 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 CosmoSteel Holdings Limited are associated (or correlated) with ANDRADA MINING. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ANDRADA MINING LTD has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and ANDRADA MINING go up and down completely randomly.
Pair Corralation between CosmoSteel Holdings and ANDRADA MINING
Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to generate 0.38 times more return on investment than ANDRADA MINING. However, CosmoSteel Holdings Limited is 2.62 times less risky than ANDRADA MINING. It trades about -0.11 of its potential returns per unit of risk. ANDRADA MINING LTD is currently generating about -0.19 per unit of risk. If you would invest 6.50 in CosmoSteel Holdings Limited on August 24, 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 | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CosmoSteel Holdings Limited vs. ANDRADA MINING LTD
Performance |
| Timeline |
| CosmoSteel Holdings |
| ANDRADA MINING LTD |
CosmoSteel Holdings and ANDRADA MINING Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CosmoSteel Holdings and ANDRADA MINING
The main advantage of trading using opposite CosmoSteel Holdings and ANDRADA MINING positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings position performs unexpectedly, ANDRADA MINING 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 ANDRADA MINING will offset losses from the drop in ANDRADA MINING's long position.| CosmoSteel Holdings vs. Indutrade AB | CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. NMI Holdings | CosmoSteel Holdings vs. Origin Agritech |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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