Correlation Between Watsco and CosmoSteel Holdings
Can any of the company-specific risk be diversified away by investing in both Watsco 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 Watsco and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Watsco Inc and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Watsco 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 Watsco with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Watsco and CosmoSteel Holdings.
Diversification Opportunities for Watsco and CosmoSteel Holdings
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Watsco and CosmoSteel is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Watsco Inc and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and Watsco 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 Watsco Inc 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 Watsco i.e., Watsco and CosmoSteel Holdings go up and down completely randomly.
Pair Corralation between Watsco and CosmoSteel Holdings
If you would invest 6.75 in CosmoSteel Holdings Limited on December 11, 2024 and sell it today you would earn a total of 0.95 from holding CosmoSteel Holdings Limited or generate 14.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 0.0% |
| Values | Daily Returns |
Watsco Inc vs. CosmoSteel Holdings Limited
Performance |
| Timeline |
| Watsco Inc |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| CosmoSteel Holdings |
Watsco and CosmoSteel Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Watsco and CosmoSteel Holdings
The main advantage of trading using opposite Watsco and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Watsco 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.| Watsco vs. LAir Liquide SA | Watsco vs. QLEANAIR AB SK 50 | Watsco vs. Enter Air SA | Watsco vs. SOGECLAIR SA INH |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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