Correlation Between United States and Cogobuy
Can any of the company-specific risk be diversified away by investing in both United States and Cogobuy 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 United States and Cogobuy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and Cogobuy Group, you can compare the effects of market volatilities on United States and Cogobuy 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 United States with a short position of Cogobuy. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and Cogobuy.
Diversification Opportunities for United States and Cogobuy
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between United and Cogobuy is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and Cogobuy Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogobuy Group and United States 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 United States Steel are associated (or correlated) with Cogobuy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogobuy Group has no effect on the direction of United States i.e., United States and Cogobuy go up and down completely randomly.
Pair Corralation between United States and Cogobuy
Assuming the 90 days trading horizon United States is expected to generate 1.27 times less return on investment than Cogobuy. But when comparing it to its historical volatility, United States Steel is 2.06 times less risky than Cogobuy. It trades about 0.05 of its potential returns per unit of risk. Cogobuy Group is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 15.00 in Cogobuy Group on September 2, 2024 and sell it today you would earn a total of 0.00 from holding Cogobuy Group or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. Cogobuy Group
Performance |
| Timeline |
| United States Steel |
| Cogobuy Group |
United States and Cogobuy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and Cogobuy
The main advantage of trading using opposite United States and Cogobuy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States position performs unexpectedly, Cogobuy 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 Cogobuy will offset losses from the drop in Cogobuy's long position.The idea behind United States Steel and Cogobuy Group pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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