Correlation Between CosmoSteel Holdings and China Communications
Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and China Communications 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 China Communications 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 China Communications Construction, you can compare the effects of market volatilities on CosmoSteel Holdings and China Communications 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 China Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and China Communications.
Diversification Opportunities for CosmoSteel Holdings and China Communications
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between CosmoSteel and China is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and China Communications Construct in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China Communications 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 China Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China Communications has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and China Communications go up and down completely randomly.
Pair Corralation between CosmoSteel Holdings and China Communications
Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to under-perform the China Communications. But the stock apears to be less risky and, when comparing its historical volatility, CosmoSteel Holdings Limited is 3.8 times less risky than China Communications. The stock trades about -0.02 of its potential returns per unit of risk. The China Communications Construction is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 18.00 in China Communications Construction on September 4, 2024 and sell it today you would earn a total of 44.00 from holding China Communications Construction or generate 244.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.66% |
| Values | Daily Returns |
CosmoSteel Holdings Limited vs. China Communications Construct
Performance |
| Timeline |
| CosmoSteel Holdings |
| China Communications |
CosmoSteel Holdings and China Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CosmoSteel Holdings and China Communications
The main advantage of trading using opposite CosmoSteel Holdings and China Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings position performs unexpectedly, China Communications 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 China Communications will offset losses from the drop in China Communications' long position.| CosmoSteel Holdings vs. Indutrade AB | CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. NMI Holdings | CosmoSteel Holdings vs. Origin Agritech |
| China Communications vs. USWE SPORTS AB | China Communications vs. Columbia Sportswear | China Communications vs. MCEWEN MINING INC | China Communications vs. MINCO SILVER |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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