Correlation Between CN MODERN and CosmoSteel Holdings

Can any of the company-specific risk be diversified away by investing in both CN MODERN 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 CN MODERN and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CN MODERN DAIRY and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on CN MODERN 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 CN MODERN with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of CN MODERN and CosmoSteel Holdings.

Diversification Opportunities for CN MODERN and CosmoSteel Holdings

0.48

Correlation Coefficient

CN MODERN  CosmoSteel Holdings

Very weak diversification

The 3 months correlation between 07M and CosmoSteel is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding CN MODERN DAIRY and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and CN MODERN 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 CN MODERN DAIRY 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 CN MODERN i.e., CN MODERN and CosmoSteel Holdings go up and down completely randomly.

Pair Corralation between CN MODERN and CosmoSteel Holdings

Assuming the 90 days trading horizon CN MODERN DAIRY is expected to generate 1.18 times more return on investment than CosmoSteel Holdings. However, CN MODERN is 1.18 times more volatile than CosmoSteel Holdings Limited. It trades about 0.06 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.0 per unit of risk. If you would invest  6.84  in CN MODERN DAIRY on October 22, 2024 and sell it today you would earn a total of  2.81  from holding CN MODERN DAIRY or generate 41.08% return on investment over 90 days.

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

CN MODERN DAIRY  vs.  CosmoSteel Holdings Limited

CN MODERN DAIRY

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CN MODERN DAIRY are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CN MODERN is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

CosmoSteel Holdings

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CosmoSteel Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with CN MODERN and CosmoSteel Holdings

The main advantage of trading using opposite CN MODERN and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CN MODERN 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.

The idea behind CN MODERN DAIRY and CosmoSteel Holdings Limited 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 CEOs Directory module to screen CEOs from public companies around the world.