Correlation Between COSMO FIRST and PYRAMID TECHNOPLAST

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

Diversification Opportunities for COSMO FIRST and PYRAMID TECHNOPLAST

0.61

Correlation Coefficient

COSMO FIRST  PYRAMID TECHNOPLAST

Poor diversification

The 3 months correlation between COSMO and PYRAMID is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and PYRAMID TECHNOPLAST ORD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PYRAMID TECHNOPLAST ORD 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 PYRAMID TECHNOPLAST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PYRAMID TECHNOPLAST ORD has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and PYRAMID TECHNOPLAST go up and down completely randomly.

Pair Corralation between COSMO FIRST and PYRAMID TECHNOPLAST

Assuming the 90 days trading horizon COSMO FIRST is expected to generate 1.17 times less return on investment than PYRAMID TECHNOPLAST. But when comparing it to its historical volatility, COSMO FIRST LIMITED is 1.12 times less risky than PYRAMID TECHNOPLAST. It trades about 0.01 of its potential returns per unit of risk. PYRAMID TECHNOPLAST ORD is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  17,765  in PYRAMID TECHNOPLAST ORD on December 2, 2024 and sell it today you would lose (1,068) from holding PYRAMID TECHNOPLAST ORD or give up 6.01% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.49%
Values	Daily Returns

COSMO FIRST LIMITED  vs.  PYRAMID TECHNOPLAST ORD

COSMO FIRST LIMITED

Risk-Adjusted Performance

Very Weak

Over the last 90 days COSMO FIRST LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

PYRAMID TECHNOPLAST ORD

Risk-Adjusted Performance

Very Weak

Over the last 90 days PYRAMID TECHNOPLAST ORD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with COSMO FIRST and PYRAMID TECHNOPLAST

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

The idea behind COSMO FIRST LIMITED and PYRAMID TECHNOPLAST ORD 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.