Correlation Between CosmoSteel Holdings and LEGACY IRON
Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and LEGACY IRON 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 LEGACY IRON 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 LEGACY IRON ORE, you can compare the effects of market volatilities on CosmoSteel Holdings and LEGACY IRON 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 LEGACY IRON. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and LEGACY IRON.
Diversification Opportunities for CosmoSteel Holdings and LEGACY IRON
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CosmoSteel and LEGACY is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and LEGACY IRON ORE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LEGACY IRON ORE 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 LEGACY IRON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LEGACY IRON ORE has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and LEGACY IRON go up and down completely randomly.
Pair Corralation between CosmoSteel Holdings and LEGACY IRON
Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to generate 1.95 times more return on investment than LEGACY IRON. However, CosmoSteel Holdings is 1.95 times more volatile than LEGACY IRON ORE. It trades about -0.04 of its potential returns per unit of risk. LEGACY IRON ORE is currently generating about -0.13 per unit of risk. If you would invest 6.55 in CosmoSteel Holdings Limited on August 29, 2024 and sell it today you would lose (0.50) from holding CosmoSteel Holdings Limited or give up 7.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CosmoSteel Holdings Limited vs. LEGACY IRON ORE
Performance |
| Timeline |
| CosmoSteel Holdings |
| LEGACY IRON ORE |
CosmoSteel Holdings and LEGACY IRON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CosmoSteel Holdings and LEGACY IRON
The main advantage of trading using opposite CosmoSteel Holdings and LEGACY IRON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings position performs unexpectedly, LEGACY IRON 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 LEGACY IRON will offset losses from the drop in LEGACY IRON's long position.| CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. NMI Holdings | CosmoSteel Holdings vs. Origin Agritech | CosmoSteel Holdings vs. SIVERS SEMICONDUCTORS AB |
| LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Apple Inc | LEGACY IRON vs. Microsoft | LEGACY IRON vs. Microsoft |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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