Correlation Between COSMO FIRST and Kalpataru Projects

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

Diversification Opportunities for COSMO FIRST and Kalpataru Projects

0.48

Correlation Coefficient

COSMO FIRST  Kalpataru Projects

Very weak diversification

The 3 months correlation between COSMO and Kalpataru is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Kalpataru Projects Internation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kalpataru Projects 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 Kalpataru Projects. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kalpataru Projects has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Kalpataru Projects go up and down completely randomly.

Pair Corralation between COSMO FIRST and Kalpataru Projects

Assuming the 90 days trading horizon COSMO FIRST LIMITED is expected to generate 1.78 times more return on investment than Kalpataru Projects. However, COSMO FIRST is 1.78 times more volatile than Kalpataru Projects International. It trades about 0.12 of its potential returns per unit of risk. Kalpataru Projects International is currently generating about -0.02 per unit of risk. If you would invest  76,090  in COSMO FIRST LIMITED on October 12, 2024 and sell it today you would earn a total of  18,260  from holding COSMO FIRST LIMITED or generate 24.0% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Kalpataru Projects Internation

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 conflicting basic indicators, COSMO FIRST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Kalpataru Projects

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kalpataru Projects International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kalpataru Projects is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COSMO FIRST and Kalpataru Projects

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

The idea behind COSMO FIRST LIMITED and Kalpataru Projects International 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.