Correlation Between COSMO FIRST and Hexa Tradex

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

Diversification Opportunities for COSMO FIRST and Hexa Tradex

0.45

Correlation Coefficient

COSMO FIRST  Hexa Tradex

Very weak diversification

The 3 months correlation between COSMO and Hexa is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Hexa Tradex Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hexa Tradex Limited 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 Hexa Tradex. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hexa Tradex Limited has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Hexa Tradex go up and down completely randomly.

Pair Corralation between COSMO FIRST and Hexa Tradex

Assuming the 90 days trading horizon COSMO FIRST is expected to generate 2.1 times less return on investment than Hexa Tradex. In addition to that, COSMO FIRST is 1.04 times more volatile than Hexa Tradex Limited. It trades about 0.03 of its total potential returns per unit of risk. Hexa Tradex Limited is currently generating about 0.06 per unit of volatility. If you would invest  15,600  in Hexa Tradex Limited on September 24, 2024 and sell it today you would earn a total of  13,515  from holding Hexa Tradex Limited or generate 86.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.39%
Values	Daily Returns

COSMO FIRST LIMITED  vs.  Hexa Tradex Limited

COSMO FIRST LIMITED

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly unfluctuating basic indicators, COSMO FIRST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Hexa Tradex Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hexa Tradex Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with COSMO FIRST and Hexa Tradex

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

The idea behind COSMO FIRST LIMITED and Hexa Tradex Limited 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.