Correlation Between COSMO FIRST and Diligent Media

Can any of the company-specific risk be diversified away by investing in both COSMO FIRST and Diligent Media 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 Diligent Media 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 Diligent Media, you can compare the effects of market volatilities on COSMO FIRST and Diligent Media 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 Diligent Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMO FIRST and Diligent Media.

Diversification Opportunities for COSMO FIRST and Diligent Media

0.73

Correlation Coefficient

COSMO FIRST  Diligent Media

Poor diversification

The 3 months correlation between COSMO and Diligent is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Diligent Media in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diligent Media 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 Diligent Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diligent Media has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Diligent Media go up and down completely randomly.

Pair Corralation between COSMO FIRST and Diligent Media

Assuming the 90 days trading horizon COSMO FIRST is expected to generate 1.24 times less return on investment than Diligent Media. But when comparing it to its historical volatility, COSMO FIRST LIMITED is 1.12 times less risky than Diligent Media. It trades about 0.16 of its potential returns per unit of risk. Diligent Media is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  515.00  in Diligent Media on October 6, 2024 and sell it today you would earn a total of  89.00  from holding Diligent Media or generate 17.28% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Diligent Media

COSMO FIRST LIMITED

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 13 (%) 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.

Diligent Media

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Diligent Media are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak fundamental indicators, Diligent Media demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with COSMO FIRST and Diligent Media

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

The idea behind COSMO FIRST LIMITED and Diligent Media 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.

Check out your portfolio center.

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 Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.