Correlation Between Baron Capital and Cosmos Group

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

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

Diversification Opportunities for Baron Capital and Cosmos Group

0.09

Correlation Coefficient

Baron Capital  Cosmos Group

Significant diversification

The 3 months correlation between Baron and Cosmos is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Baron Capital and Cosmos Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Group Holdings and Baron Capital 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 Baron Capital are associated (or correlated) with Cosmos Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Group Holdings has no effect on the direction of Baron Capital i.e., Baron Capital and Cosmos Group go up and down completely randomly.

Pair Corralation between Baron Capital and Cosmos Group

Given the investment horizon of 90 days Baron Capital is expected to generate 10.67 times less return on investment than Cosmos Group. But when comparing it to its historical volatility, Baron Capital is 7.7 times less risky than Cosmos Group. It trades about 0.14 of its potential returns per unit of risk. Cosmos Group Holdings is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  0.00  in Cosmos Group Holdings on December 28, 2024 and sell it today you would earn a total of  0.01  from holding Cosmos Group Holdings or generate 9.223372036854776E16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.39%
Values	Daily Returns

Baron Capital  vs.  Cosmos Group Holdings

Baron Capital

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Baron Capital are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal basic indicators, Baron Capital reported solid returns over the last few months and may actually be approaching a breakup point.

Cosmos Group Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Group Holdings are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Cosmos Group reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baron Capital and Cosmos Group

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

The idea behind Baron Capital and Cosmos Group Holdings 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.