Correlation Between COSMO FIRST and Som Distilleries

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

Diversification Opportunities for COSMO FIRST and Som Distilleries

0.39

Correlation Coefficient

COSMO FIRST  Som Distilleries

Weak diversification

The 3 months correlation between COSMO and Som is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Som Distilleries Breweries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Som Distilleries Bre 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 Som Distilleries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Som Distilleries Bre has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Som Distilleries go up and down completely randomly.

Pair Corralation between COSMO FIRST and Som Distilleries

Assuming the 90 days trading horizon COSMO FIRST LIMITED is expected to generate 1.4 times more return on investment than Som Distilleries. However, COSMO FIRST is 1.4 times more volatile than Som Distilleries Breweries. It trades about 0.12 of its potential returns per unit of risk. Som Distilleries Breweries is currently generating about -0.05 per unit of risk. If you would invest  78,095  in COSMO FIRST LIMITED on October 1, 2024 and sell it today you would earn a total of  16,895  from holding COSMO FIRST LIMITED or generate 21.63% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Som Distilleries Breweries

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

Som Distilleries Bre

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Som Distilleries Breweries has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unsteady performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with COSMO FIRST and Som Distilleries

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

The idea behind COSMO FIRST LIMITED and Som Distilleries Breweries 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.