Correlation Between COSMOSTEEL HLDGS and National Bank

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

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

Diversification Opportunities for COSMOSTEEL HLDGS and National Bank

-0.18

Correlation Coefficient

COSMOSTEEL HLDGS  National Bank

Good diversification

The 3 months correlation between COSMOSTEEL and National is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and National Bank Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Bank Holdings 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 National Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Bank Holdings has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and National Bank go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and National Bank

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to generate 0.9 times more return on investment than National Bank. However, COSMOSTEEL HLDGS is 1.11 times less risky than National Bank. It trades about -0.12 of its potential returns per unit of risk. National Bank Holdings is currently generating about -0.16 per unit of risk. If you would invest  7.05  in COSMOSTEEL HLDGS on October 15, 2024 and sell it today you would lose (0.30) from holding COSMOSTEEL HLDGS or give up 4.26% of portfolio value over 90 days.

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

COSMOSTEEL HLDGS  vs.  National Bank Holdings

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 uncertain basic indicators, COSMOSTEEL HLDGS may actually be approaching a critical reversion point that can send shares even higher in February 2025.

National Bank Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, National Bank may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with COSMOSTEEL HLDGS and National Bank

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

The idea behind COSMOSTEEL HLDGS and National Bank Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.