Correlation Between COSMOSTEEL HLDGS and GOODYEAR T
Can any of the company-specific risk be diversified away by investing in both COSMOSTEEL HLDGS and GOODYEAR T 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 HLDGS and GOODYEAR T into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSMOSTEEL HLDGS and GOODYEAR T RUBBER, you can compare the effects of market volatilities on COSMOSTEEL HLDGS and GOODYEAR T 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 HLDGS with a short position of GOODYEAR T. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMOSTEEL HLDGS and GOODYEAR T.
Diversification Opportunities for COSMOSTEEL HLDGS and GOODYEAR T
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between COSMOSTEEL and GOODYEAR is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and GOODYEAR T RUBBER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GOODYEAR T RUBBER and COSMOSTEEL HLDGS 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 HLDGS are associated (or correlated) with GOODYEAR T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GOODYEAR T RUBBER has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and GOODYEAR T go up and down completely randomly.
Pair Corralation between COSMOSTEEL HLDGS and GOODYEAR T
Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 1.3 times more return on investment than GOODYEAR T. However, COSMOSTEEL HLDGS is 1.3 times more volatile than GOODYEAR T RUBBER. It trades about 0.1 of its potential returns per unit of risk. GOODYEAR T RUBBER is currently generating about -0.06 per unit of risk. If you would invest 5.95 in COSMOSTEEL HLDGS on October 26, 2024 and sell it today you would earn a total of 0.70 from holding COSMOSTEEL HLDGS or generate 11.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COSMOSTEEL HLDGS vs. GOODYEAR T RUBBER
Performance |
| Timeline |
| COSMOSTEEL HLDGS |
| GOODYEAR T RUBBER |
COSMOSTEEL HLDGS and GOODYEAR T Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSMOSTEEL HLDGS and GOODYEAR T
The main advantage of trading using opposite COSMOSTEEL HLDGS and GOODYEAR T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSMOSTEEL HLDGS position performs unexpectedly, GOODYEAR T 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 GOODYEAR T will offset losses from the drop in GOODYEAR T's long position.| COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc | COSMOSTEEL HLDGS vs. Apple Inc |
| GOODYEAR T vs. COSMOSTEEL HLDGS | GOODYEAR T vs. KOBE STEEL LTD | GOODYEAR T vs. BANK OF CHINA | GOODYEAR T vs. United States Steel |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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