Correlation Between Caseys General and CosmoSteel Holdings

Can any of the company-specific risk be diversified away by investing in both Caseys General and CosmoSteel Holdings 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 Caseys General and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caseys General Stores and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Caseys General and CosmoSteel Holdings 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 Caseys General with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caseys General and CosmoSteel Holdings.

Diversification Opportunities for Caseys General and CosmoSteel Holdings

-0.34

Correlation Coefficient

Caseys General  CosmoSteel Holdings

Very good diversification

The 3 months correlation between Caseys and CosmoSteel is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Caseys General Stores and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and Caseys General 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 Caseys General Stores are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of Caseys General i.e., Caseys General and CosmoSteel Holdings go up and down completely randomly.

Pair Corralation between Caseys General and CosmoSteel Holdings

Assuming the 90 days trading horizon Caseys General Stores is expected to generate 0.85 times more return on investment than CosmoSteel Holdings. However, Caseys General Stores is 1.17 times less risky than CosmoSteel Holdings. It trades about 0.19 of its potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.03 per unit of risk. If you would invest  31,357  in Caseys General Stores on September 5, 2024 and sell it today you would earn a total of  8,243  from holding Caseys General Stores or generate 26.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.46%
Values	Daily Returns

Caseys General Stores  vs.  CosmoSteel Holdings Limited

Caseys General Stores

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Caseys General Stores are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caseys General unveiled solid returns over the last few months and may actually be approaching a breakup point.

CosmoSteel Holdings

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, CosmoSteel Holdings is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Caseys General and CosmoSteel Holdings

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

The idea behind Caseys General Stores and CosmoSteel Holdings 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.