Correlation Between KOOL2PLAY and COSTCO WHOLESALE

Can any of the company-specific risk be diversified away by investing in both KOOL2PLAY and COSTCO WHOLESALE 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 KOOL2PLAY and COSTCO WHOLESALE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KOOL2PLAY SA ZY and COSTCO WHOLESALE CDR, you can compare the effects of market volatilities on KOOL2PLAY and COSTCO WHOLESALE 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 KOOL2PLAY with a short position of COSTCO WHOLESALE. Check out your portfolio center. Please also check ongoing floating volatility patterns of KOOL2PLAY and COSTCO WHOLESALE.

Diversification Opportunities for KOOL2PLAY and COSTCO WHOLESALE

-0.51

Correlation Coefficient

KOOL2PLAY  COSTCO WHOLESALE

Excellent diversification

The 3 months correlation between KOOL2PLAY and COSTCO is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding KOOL2PLAY SA ZY and COSTCO WHOLESALE CDR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSTCO WHOLESALE CDR and KOOL2PLAY 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 KOOL2PLAY SA ZY are associated (or correlated) with COSTCO WHOLESALE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSTCO WHOLESALE CDR has no effect on the direction of KOOL2PLAY i.e., KOOL2PLAY and COSTCO WHOLESALE go up and down completely randomly.

Pair Corralation between KOOL2PLAY and COSTCO WHOLESALE

Assuming the 90 days horizon KOOL2PLAY SA ZY is expected to under-perform the COSTCO WHOLESALE. In addition to that, KOOL2PLAY is 2.84 times more volatile than COSTCO WHOLESALE CDR. It trades about -0.03 of its total potential returns per unit of risk. COSTCO WHOLESALE CDR is currently generating about 0.12 per unit of volatility. If you would invest  2,774  in COSTCO WHOLESALE CDR on September 15, 2024 and sell it today you would earn a total of  326.00  from holding COSTCO WHOLESALE CDR or generate 11.75% return on investment over 90 days.

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

KOOL2PLAY SA ZY  vs.  COSTCO WHOLESALE CDR

KOOL2PLAY SA ZY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KOOL2PLAY SA ZY has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

COSTCO WHOLESALE CDR

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSTCO WHOLESALE CDR are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, COSTCO WHOLESALE may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with KOOL2PLAY and COSTCO WHOLESALE

The main advantage of trading using opposite KOOL2PLAY and COSTCO WHOLESALE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KOOL2PLAY position performs unexpectedly, COSTCO WHOLESALE 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 COSTCO WHOLESALE will offset losses from the drop in COSTCO WHOLESALE's long position.

The idea behind KOOL2PLAY SA ZY and COSTCO WHOLESALE CDR 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.