Correlation Between Sunway Construction and Cosmos Technology

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

By analyzing existing cross correlation between Sunway Construction Group and Cosmos Technology International, you can compare the effects of market volatilities on Sunway Construction and Cosmos 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 Sunway Construction with a short position of Cosmos Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunway Construction and Cosmos Technology.

Diversification Opportunities for Sunway Construction and Cosmos Technology

0.62

Correlation Coefficient

Sunway Construction  Cosmos Technology

Poor diversification

The 3 months correlation between Sunway and Cosmos is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Sunway Construction Group and Cosmos Technology Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Technology and Sunway Construction 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 Sunway Construction Group are associated (or correlated) with Cosmos Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Technology has no effect on the direction of Sunway Construction i.e., Sunway Construction and Cosmos Technology go up and down completely randomly.

Pair Corralation between Sunway Construction and Cosmos Technology

Assuming the 90 days trading horizon Sunway Construction is expected to generate 1.2 times less return on investment than Cosmos Technology. But when comparing it to its historical volatility, Sunway Construction Group is 1.01 times less risky than Cosmos Technology. It trades about 0.11 of its potential returns per unit of risk. Cosmos Technology International is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  36.00  in Cosmos Technology International on October 10, 2024 and sell it today you would earn a total of  6.00  from holding Cosmos Technology International or generate 16.67% return on investment over 90 days.

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

Sunway Construction Group  vs.  Cosmos Technology Internationa

Sunway Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sunway Construction Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Sunway Construction disclosed solid returns over the last few months and may actually be approaching a breakup point.

Cosmos Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Technology International are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cosmos Technology disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sunway Construction and Cosmos Technology

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

The idea behind Sunway Construction Group and Cosmos Technology International 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.