Correlation Between SOOSAN INT and Cots Technology

Can any of the company-specific risk be diversified away by investing in both SOOSAN INT and Cots Technology 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 SOOSAN INT and Cots Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SOOSAN INT Co and Cots Technology Co, you can compare the effects of market volatilities on SOOSAN INT and Cots Technology 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 SOOSAN INT with a short position of Cots Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOOSAN INT and Cots Technology.

Diversification Opportunities for SOOSAN INT and Cots Technology

-0.24

Correlation Coefficient

SOOSAN INT  Cots Technology

Very good diversification

The 3 months correlation between SOOSAN and Cots is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding SOOSAN INT Co and Cots Technology Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cots Technology and SOOSAN INT 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 SOOSAN INT Co are associated (or correlated) with Cots Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cots Technology has no effect on the direction of SOOSAN INT i.e., SOOSAN INT and Cots Technology go up and down completely randomly.

Pair Corralation between SOOSAN INT and Cots Technology

Assuming the 90 days trading horizon SOOSAN INT Co is expected to generate 2.66 times more return on investment than Cots Technology. However, SOOSAN INT is 2.66 times more volatile than Cots Technology Co. It trades about 0.18 of its potential returns per unit of risk. Cots Technology Co is currently generating about 0.1 per unit of risk. If you would invest  844,199  in SOOSAN INT Co on November 29, 2024 and sell it today you would earn a total of  851,801  from holding SOOSAN INT Co or generate 100.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

SOOSAN INT Co  vs.  Cots Technology Co

SOOSAN INT

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SOOSAN INT Co are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, SOOSAN INT sustained solid returns over the last few months and may actually be approaching a breakup point.

Cots Technology

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cots Technology Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Cots Technology sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SOOSAN INT and Cots Technology

The main advantage of trading using opposite SOOSAN INT and Cots Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOOSAN INT position performs unexpectedly, Cots Technology 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 Cots Technology will offset losses from the drop in Cots Technology's long position.

The idea behind SOOSAN INT Co and Cots Technology Co 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.

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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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.