Correlation Between COSMO FIRST and DJ Mediaprint

Can any of the company-specific risk be diversified away by investing in both COSMO FIRST and DJ Mediaprint 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 COSMO FIRST and DJ Mediaprint into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between COSMO FIRST LIMITED and DJ Mediaprint Logistics, you can compare the effects of market volatilities on COSMO FIRST and DJ Mediaprint 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 COSMO FIRST with a short position of DJ Mediaprint. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMO FIRST and DJ Mediaprint.

Diversification Opportunities for COSMO FIRST and DJ Mediaprint

0.94

Correlation Coefficient

COSMO FIRST  DJ Mediaprint

Almost no diversification

The 3 months correlation between COSMO and DJML is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and DJ Mediaprint Logistics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DJ Mediaprint Logistics and COSMO FIRST 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 COSMO FIRST LIMITED are associated (or correlated) with DJ Mediaprint. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DJ Mediaprint Logistics has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and DJ Mediaprint go up and down completely randomly.

Pair Corralation between COSMO FIRST and DJ Mediaprint

Assuming the 90 days trading horizon COSMO FIRST is expected to generate 22.04 times less return on investment than DJ Mediaprint. But when comparing it to its historical volatility, COSMO FIRST LIMITED is 8.42 times less risky than DJ Mediaprint. It trades about 0.03 of its potential returns per unit of risk. DJ Mediaprint Logistics is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,839  in DJ Mediaprint Logistics on September 23, 2024 and sell it today you would earn a total of  14,955  from holding DJ Mediaprint Logistics or generate 309.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	99.59%
Values	Daily Returns

COSMO FIRST LIMITED  vs.  DJ Mediaprint Logistics

COSMO FIRST LIMITED

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, COSMO FIRST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

DJ Mediaprint Logistics

Risk-Adjusted Performance

23 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DJ Mediaprint Logistics are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, DJ Mediaprint unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSMO FIRST and DJ Mediaprint

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

The idea behind COSMO FIRST LIMITED and DJ Mediaprint Logistics 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.