Correlation Between United States and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and CosmoSteel Holdings 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 CosmoSteel Holdings Limited, you can compare the effects of market volatilities on United States 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 United States with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and CosmoSteel Holdings.
Diversification Opportunities for United States and CosmoSteel Holdings
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between United and CosmoSteel is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings 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 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 United States i.e., United States and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between United States and CosmoSteel Holdings
Assuming the 90 days trading horizon United States Steel is expected to generate 1.05 times more return on investment than CosmoSteel Holdings. However, United States is 1.05 times more volatile than CosmoSteel Holdings Limited. It trades about 0.04 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.01 per unit of risk. If you would invest 2,506 in United States Steel on August 26, 2024 and sell it today you would earn a total of 1,128 from holding United States Steel or generate 45.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
United States Steel vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| United States Steel |
| CosmoSteel Holdings |
United States and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and CosmoSteel Holdings
The main advantage of trading using opposite United States and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. ArcelorMittal SA | United States vs. ArcelorMittal | United States vs. Nippon Steel | United States vs. NIPPON STEEL SPADR |
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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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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