Correlation Between CosmoSteel Holdings and Link Real

Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and Link Real 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 Link Real 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 Link Real Estate, you can compare the effects of market volatilities on CosmoSteel Holdings and Link Real 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 Link Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and Link Real.

Diversification Opportunities for CosmoSteel Holdings and Link Real

0.43

Correlation Coefficient

CosmoSteel Holdings  Link Real

Very weak diversification

The 3 months correlation between CosmoSteel and Link is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and Link Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Link Real Estate 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 Link Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Link Real Estate has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and Link Real go up and down completely randomly.

Pair Corralation between CosmoSteel Holdings and Link Real

Assuming the 90 days horizon CosmoSteel Holdings is expected to generate 5.49 times less return on investment than Link Real. But when comparing it to its historical volatility, CosmoSteel Holdings Limited is 1.53 times less risky than Link Real. It trades about 0.03 of its potential returns per unit of risk. Link Real Estate is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  315.00  in Link Real Estate on October 4, 2024 and sell it today you would earn a total of  85.00  from holding Link Real Estate or generate 26.98% return on investment over 90 days.

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

CosmoSteel Holdings Limited  vs.  Link Real Estate

CosmoSteel Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CosmoSteel Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Link Real Estate

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Link Real Estate are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Link Real reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CosmoSteel Holdings and Link Real

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

The idea behind CosmoSteel Holdings Limited and Link Real Estate 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.