Correlation Between COMBA TELECOM and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both COMBA TELECOM and CosmoSteel Holdings 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 COMBA TELECOM and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between COMBA TELECOM SYST and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on COMBA TELECOM and CosmoSteel Holdings 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 COMBA TELECOM with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of COMBA TELECOM and CosmoSteel Holdings.
Diversification Opportunities for COMBA TELECOM and CosmoSteel Holdings
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between COMBA and CosmoSteel is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding COMBA TELECOM SYST and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and COMBA TELECOM 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 COMBA TELECOM SYST are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of COMBA TELECOM i.e., COMBA TELECOM and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between COMBA TELECOM and CosmoSteel Holdings
Assuming the 90 days trading horizon COMBA TELECOM SYST is expected to generate 1.6 times more return on investment than CosmoSteel Holdings. However, COMBA TELECOM is 1.6 times more volatile than CosmoSteel Holdings Limited. It trades about 0.55 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.02 per unit of risk. If you would invest 13.00 in COMBA TELECOM SYST on December 15, 2024 and sell it today you would earn a total of 10.00 from holding COMBA TELECOM SYST or generate 76.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
COMBA TELECOM SYST vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| COMBA TELECOM SYST |
| CosmoSteel Holdings |
COMBA TELECOM and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with COMBA TELECOM and CosmoSteel Holdings
The main advantage of trading using opposite COMBA TELECOM and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if COMBA TELECOM position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.| COMBA TELECOM vs. Liberty Broadband | ||
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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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