Correlation Between ITALIAN WINE and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both ITALIAN WINE 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 ITALIAN WINE and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ITALIAN WINE BRANDS and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on ITALIAN WINE 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 ITALIAN WINE with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of ITALIAN WINE and CosmoSteel Holdings.
Diversification Opportunities for ITALIAN WINE and CosmoSteel Holdings
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ITALIAN and CosmoSteel is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding ITALIAN WINE BRANDS and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and ITALIAN WINE 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 ITALIAN WINE BRANDS 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 ITALIAN WINE i.e., ITALIAN WINE and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between ITALIAN WINE and CosmoSteel Holdings
Assuming the 90 days horizon ITALIAN WINE is expected to generate 6.51 times less return on investment than CosmoSteel Holdings. But when comparing it to its historical volatility, ITALIAN WINE BRANDS is 3.27 times less risky than CosmoSteel Holdings. It trades about 0.12 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 6.05 in CosmoSteel Holdings Limited on September 12, 2024 and sell it today you would earn a total of 1.35 from holding CosmoSteel Holdings Limited or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ITALIAN WINE BRANDS vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| ITALIAN WINE BRANDS |
| CosmoSteel Holdings |
ITALIAN WINE and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ITALIAN WINE and CosmoSteel Holdings
The main advantage of trading using opposite ITALIAN WINE and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ITALIAN WINE 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.| ITALIAN WINE vs. Fast Retailing Co | ITALIAN WINE vs. United Natural Foods | ITALIAN WINE vs. AUSTEVOLL SEAFOOD | ITALIAN WINE vs. ASSOC BR FOODS |
| CosmoSteel Holdings vs. WATSCO INC B | CosmoSteel Holdings vs. Indutrade AB | CosmoSteel Holdings vs. Superior Plus Corp | CosmoSteel Holdings vs. SIVERS SEMICONDUCTORS AB |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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