Correlation Between COSMOSTEEL HLDGS and Amazon

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

By analyzing existing cross correlation between COSMOSTEEL HLDGS and Amazon Inc, you can compare the effects of market volatilities on COSMOSTEEL HLDGS and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMOSTEEL HLDGS and Amazon.

Diversification Opportunities for COSMOSTEEL HLDGS and Amazon

0.52

Correlation Coefficient

COSMOSTEEL HLDGS  Amazon

Very weak diversification

The 3 months correlation between COSMOSTEEL and Amazon is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and Amazon go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and Amazon

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 1.07 times less return on investment than Amazon. In addition to that, COSMOSTEEL HLDGS is 2.4 times more volatile than Amazon Inc. It trades about 0.09 of its total potential returns per unit of risk. Amazon Inc is currently generating about 0.23 per unit of volatility. If you would invest  19,150  in Amazon Inc on October 7, 2024 and sell it today you would earn a total of  2,605  from holding Amazon Inc or generate 13.6% return on investment over 90 days.

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

COSMOSTEEL HLDGS  vs.  Amazon Inc

COSMOSTEEL HLDGS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, COSMOSTEEL HLDGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Amazon Inc

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Amazon Inc are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Amazon unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSMOSTEEL HLDGS and Amazon

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

The idea behind COSMOSTEEL HLDGS and Amazon Inc 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.