Correlation Between Cosmo Metals and Everest Metals

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

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

Diversification Opportunities for Cosmo Metals and Everest Metals

0.0

Correlation Coefficient

Cosmo Metals  Everest Metals

Pay attention - limited upside

The 3 months correlation between Cosmo and Everest is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Everest Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everest Metals and Cosmo Metals 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 Cosmo Metals are associated (or correlated) with Everest Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everest Metals has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Everest Metals go up and down completely randomly.

Pair Corralation between Cosmo Metals and Everest Metals

Assuming the 90 days trading horizon Cosmo Metals is expected to generate 1.08 times more return on investment than Everest Metals. However, Cosmo Metals is 1.08 times more volatile than Everest Metals. It trades about 0.27 of its potential returns per unit of risk. Everest Metals is currently generating about -0.08 per unit of risk. If you would invest  1.80  in Cosmo Metals on October 10, 2024 and sell it today you would earn a total of  0.40  from holding Cosmo Metals or generate 22.22% return on investment over 90 days.

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

Cosmo Metals  vs.  Everest Metals

Cosmo Metals

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cosmo Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Everest Metals

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Everest Metals are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Everest Metals is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Cosmo Metals and Everest Metals

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

The idea behind Cosmo Metals and Everest Metals 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..