Correlation Between CosmoSteel Holdings and Datang International
Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and Datang International 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 Datang International 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 Datang International Power, you can compare the effects of market volatilities on CosmoSteel Holdings and Datang International 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 Datang International. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and Datang International.
Diversification Opportunities for CosmoSteel Holdings and Datang International
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CosmoSteel and Datang is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and Datang International Power in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Datang International 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 Datang International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Datang International has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and Datang International go up and down completely randomly.
Pair Corralation between CosmoSteel Holdings and Datang International
Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to under-perform the Datang International. But the stock apears to be less risky and, when comparing its historical volatility, CosmoSteel Holdings Limited is 1.66 times less risky than Datang International. The stock trades about -0.01 of its potential returns per unit of risk. The Datang International Power is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 13.00 in Datang International Power on August 31, 2024 and sell it today you would earn a total of 3.00 from holding Datang International Power or generate 23.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
CosmoSteel Holdings Limited vs. Datang International Power
Performance |
| Timeline |
| CosmoSteel Holdings |
| Datang International |
CosmoSteel Holdings and Datang International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CosmoSteel Holdings and Datang International
The main advantage of trading using opposite CosmoSteel Holdings and Datang International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings position performs unexpectedly, Datang International 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 Datang International will offset losses from the drop in Datang International's long position.| CosmoSteel Holdings vs. WATSCO INC B | CosmoSteel Holdings vs. Indutrade AB | CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. NMI Holdings |
| Datang International vs. CENTRICA ADR NEW | Datang International vs. TransAlta | Datang International vs. Superior Plus Corp | Datang International vs. NMI Holdings |
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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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