Correlation Between COSMOSTEEL HLDGS and PT Steel

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

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

Diversification Opportunities for COSMOSTEEL HLDGS and PT Steel

-0.15

Correlation Coefficient

COSMOSTEEL HLDGS  PT Steel

Good diversification

The 3 months correlation between COSMOSTEEL and S08 is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding COSMOSTEEL HLDGS and PT Steel Pipe in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PT Steel Pipe 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 PT Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PT Steel Pipe has no effect on the direction of COSMOSTEEL HLDGS i.e., COSMOSTEEL HLDGS and PT Steel go up and down completely randomly.

Pair Corralation between COSMOSTEEL HLDGS and PT Steel

Assuming the 90 days trading horizon COSMOSTEEL HLDGS is expected to under-perform the PT Steel. But the stock apears to be less risky and, when comparing its historical volatility, COSMOSTEEL HLDGS is 4.02 times less risky than PT Steel. The stock trades about -0.16 of its potential returns per unit of risk. The PT Steel Pipe is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1.25  in PT Steel Pipe on October 10, 2024 and sell it today you would earn a total of  0.20  from holding PT Steel Pipe or generate 16.0% return on investment over 90 days.

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

COSMOSTEEL HLDGS  vs.  PT Steel Pipe

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 stable basic indicators, COSMOSTEEL HLDGS is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

PT Steel Pipe

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PT Steel Pipe are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, PT Steel reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSMOSTEEL HLDGS and PT Steel

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

The idea behind COSMOSTEEL HLDGS and PT Steel Pipe 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.