Correlation Between COSMOSTEEL HLDGS and Wal-Mart

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

By analyzing existing cross correlation between COSMOSTEEL HLDGS and Wal Mart de Mxico, you can compare the effects of market volatilities on COSMOSTEEL HLDGS and Wal-Mart 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 HLDGS with a short position of Wal-Mart. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMOSTEEL HLDGS and Wal-Mart.

Diversification Opportunities for COSMOSTEEL HLDGS and Wal-Mart

0.07

Correlation Coefficient

COSMOSTEEL HLDGS  Wal-Mart

Significant diversification

The 3 months correlation between COSMOSTEEL and Wal-Mart is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and Wal Mart de Mxico in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wal Mart de and COSMOSTEEL HLDGS 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 HLDGS are associated (or correlated) with Wal-Mart. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wal Mart de has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and Wal-Mart go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and Wal-Mart

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 6.54 times less return on investment than Wal-Mart. But when comparing it to its historical volatility, COSMOSTEEL HLDGS is 4.18 times less risky than Wal-Mart. It trades about 0.11 of its potential returns per unit of risk. Wal Mart de Mxico is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  92.00  in Wal Mart de Mxico on September 13, 2024 and sell it today you would earn a total of  178.00  from holding Wal Mart de Mxico or generate 193.48% return on investment over 90 days.

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

COSMOSTEEL HLDGS  vs.  Wal Mart de Mxico

COSMOSTEEL HLDGS

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, COSMOSTEEL HLDGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Wal Mart de

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Wal Mart de Mxico are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Wal-Mart reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSMOSTEEL HLDGS and Wal-Mart

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

The idea behind COSMOSTEEL HLDGS and Wal Mart de Mxico 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.