Correlation Between Cosmos Group and Regional Management

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

By analyzing existing cross correlation between Cosmos Group Holdings and Regional Management Corp, you can compare the effects of market volatilities on Cosmos Group and Regional Management 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 Cosmos Group with a short position of Regional Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos Group and Regional Management.

Diversification Opportunities for Cosmos Group and Regional Management

0.14

Correlation Coefficient

Cosmos Group  Regional Management

Average diversification

The 3 months correlation between Cosmos and Regional is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Group Holdings and Regional Management Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Regional Management Corp and Cosmos Group 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 Cosmos Group Holdings are associated (or correlated) with Regional Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Regional Management Corp has no effect on the direction of Cosmos Group i.e., Cosmos Group and Regional Management go up and down completely randomly.

Pair Corralation between Cosmos Group and Regional Management

Given the investment horizon of 90 days Cosmos Group Holdings is expected to generate 100.65 times more return on investment than Regional Management. However, Cosmos Group is 100.65 times more volatile than Regional Management Corp. It trades about 0.22 of its potential returns per unit of risk. Regional Management Corp is currently generating about 0.0 per unit of risk. If you would invest  0.01  in Cosmos Group Holdings on September 4, 2024 and sell it today you would lose (0.01) from holding Cosmos Group Holdings or give up 100.0% of portfolio value over 90 days.

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

Cosmos Group Holdings  vs.  Regional Management Corp

Cosmos Group Holdings

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Group Holdings are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Cosmos Group reported solid returns over the last few months and may actually be approaching a breakup point.

Regional Management Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Regional Management Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Regional Management is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cosmos Group and Regional Management

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

The idea behind Cosmos Group Holdings and Regional Management Corp 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..