Correlation Between COSMOSTEEL HLDGS and Tokyu Construction
Can any of the company-specific risk be diversified away by investing in both COSMOSTEEL HLDGS and Tokyu Construction 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 Tokyu Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COSMOSTEEL HLDGS and Tokyu Construction Co, you can compare the effects of market volatilities on COSMOSTEEL HLDGS and Tokyu Construction 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 Tokyu Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMOSTEEL HLDGS and Tokyu Construction.
Diversification Opportunities for COSMOSTEEL HLDGS and Tokyu Construction
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between COSMOSTEEL and Tokyu is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and Tokyu Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyu Construction 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 Tokyu Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyu Construction has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and Tokyu Construction go up and down completely randomly.
Pair Corralation between COSMOSTEEL HLDGS and Tokyu Construction
Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 2.16 times more return on investment than Tokyu Construction. However, COSMOSTEEL HLDGS is 2.16 times more volatile than Tokyu Construction Co. It trades about 0.01 of its potential returns per unit of risk. Tokyu Construction Co is currently generating about 0.01 per unit of risk. If you would invest 7.78 in COSMOSTEEL HLDGS on November 5, 2024 and sell it today you would lose (0.78) from holding COSMOSTEEL HLDGS or give up 10.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.8% |
| Values | Daily Returns |
COSMOSTEEL HLDGS vs. Tokyu Construction Co
Performance |
| Timeline |
| COSMOSTEEL HLDGS |
| Tokyu Construction |
COSMOSTEEL HLDGS and Tokyu Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COSMOSTEEL HLDGS and Tokyu Construction
The main advantage of trading using opposite COSMOSTEEL HLDGS and Tokyu Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COSMOSTEEL HLDGS position performs unexpectedly, Tokyu Construction 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 Tokyu Construction will offset losses from the drop in Tokyu Construction's long position.| COSMOSTEEL HLDGS vs. Guangdong Investment Limited | COSMOSTEEL HLDGS vs. Goosehead Insurance | COSMOSTEEL HLDGS vs. Singapore Reinsurance | COSMOSTEEL HLDGS vs. CHRYSALIS INVESTMENTS LTD |
| Tokyu Construction vs. Haverty Furniture Companies | Tokyu Construction vs. HAVERTY FURNITURE A | Tokyu Construction vs. Hisense Home Appliances | Tokyu Construction vs. AUST AGRICULTURAL |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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