Correlation Between CosmoSteel Holdings and Boiron SA

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

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

Diversification Opportunities for CosmoSteel Holdings and Boiron SA

-0.78

Correlation Coefficient

CosmoSteel Holdings  Boiron SA

Pay attention - limited upside

The 3 months correlation between CosmoSteel and Boiron is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and Boiron SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boiron SA and CosmoSteel Holdings 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 CosmoSteel Holdings Limited are associated (or correlated) with Boiron SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boiron SA has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and Boiron SA go up and down completely randomly.

Pair Corralation between CosmoSteel Holdings and Boiron SA

Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to generate 1.22 times more return on investment than Boiron SA. However, CosmoSteel Holdings is 1.22 times more volatile than Boiron SA. It trades about 0.13 of its potential returns per unit of risk. Boiron SA is currently generating about -0.05 per unit of risk. If you would invest  6.60  in CosmoSteel Holdings Limited on December 30, 2024 and sell it today you would earn a total of  1.30  from holding CosmoSteel Holdings Limited or generate 19.7% return on investment over 90 days.

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

CosmoSteel Holdings Limited  vs.  Boiron SA

CosmoSteel Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CosmoSteel Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Boiron SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Boiron SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Boiron SA is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with CosmoSteel Holdings and Boiron SA

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

The idea behind CosmoSteel Holdings Limited and Boiron SA 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.