Correlation Between Cosmo Metals and Suncorp

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

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

Diversification Opportunities for Cosmo Metals and Suncorp

0.27

Correlation Coefficient

Cosmo Metals  Suncorp

Modest diversification

The 3 months correlation between Cosmo and Suncorp is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cosmo Metals and Suncorp Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group 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 Suncorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group has no effect on the direction of Cosmo Metals i.e., Cosmo Metals and Suncorp go up and down completely randomly.

Pair Corralation between Cosmo Metals and Suncorp

Assuming the 90 days trading horizon Cosmo Metals is expected to generate 3.21 times more return on investment than Suncorp. However, Cosmo Metals is 3.21 times more volatile than Suncorp Group. It trades about 0.01 of its potential returns per unit of risk. Suncorp Group is currently generating about -0.09 per unit of risk. If you would invest  2.20  in Cosmo Metals on December 22, 2024 and sell it today you would lose (0.30) from holding Cosmo Metals or give up 13.64% of portfolio value over 90 days.

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

Cosmo Metals  vs.  Suncorp Group

Cosmo Metals

Risk-Adjusted Performance

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 comparatively uncertain basic indicators, Cosmo Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Suncorp Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Suncorp Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cosmo Metals and Suncorp

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

The idea behind Cosmo Metals and Suncorp Group 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.