Correlation Between COSMOSTEEL HLDGS and Truist Financial

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

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

Diversification Opportunities for COSMOSTEEL HLDGS and Truist Financial

0.05

Correlation Coefficient

COSMOSTEEL HLDGS  Truist Financial

Significant diversification

The 3 months correlation between COSMOSTEEL and Truist is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and Truist Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truist Financial 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 Truist Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truist Financial has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and Truist Financial go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and Truist Financial

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 1.86 times more return on investment than Truist Financial. However, COSMOSTEEL HLDGS is 1.86 times more volatile than Truist Financial. It trades about 0.09 of its potential returns per unit of risk. Truist Financial is currently generating about -0.05 per unit of risk. If you would invest  6.75  in COSMOSTEEL HLDGS on December 23, 2024 and sell it today you would earn a total of  1.10  from holding COSMOSTEEL HLDGS or generate 16.3% 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.  Truist Financial

COSMOSTEEL HLDGS

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, COSMOSTEEL HLDGS unveiled solid returns over the last few months and may actually be approaching a breakup point.

Truist Financial

Risk-Adjusted Performance

Very Weak

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

Pair Trading with COSMOSTEEL HLDGS and Truist Financial

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

The idea behind COSMOSTEEL HLDGS and Truist Financial 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.