Correlation Between COSMOSTEEL HLDGS and Axfood AB

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

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

Diversification Opportunities for COSMOSTEEL HLDGS and Axfood AB

0.08

Correlation Coefficient

COSMOSTEEL HLDGS  Axfood AB

Significant diversification

The 3 months correlation between COSMOSTEEL and Axfood is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and Axfood AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Axfood AB 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 Axfood AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Axfood AB has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and Axfood AB go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and Axfood AB

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 2.2 times more return on investment than Axfood AB. However, COSMOSTEEL HLDGS is 2.2 times more volatile than Axfood AB. It trades about 0.1 of its potential returns per unit of risk. Axfood AB is currently generating about 0.07 per unit of risk. If you would invest  6.50  in COSMOSTEEL HLDGS on December 25, 2024 and sell it today you would earn a total of  1.35  from holding COSMOSTEEL HLDGS or generate 20.77% 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.  Axfood AB

COSMOSTEEL HLDGS

Risk-Adjusted Performance

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.

Axfood AB

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Axfood AB are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain essential indicators, Axfood AB may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with COSMOSTEEL HLDGS and Axfood AB

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

The idea behind COSMOSTEEL HLDGS and Axfood AB 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.