Correlation Between Dear Cashmere and Rosinbomb

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

By analyzing existing cross correlation between Dear Cashmere Holding and Rosinbomb, you can compare the effects of market volatilities on Dear Cashmere and Rosinbomb 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 Dear Cashmere with a short position of Rosinbomb. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dear Cashmere and Rosinbomb.

Diversification Opportunities for Dear Cashmere and Rosinbomb

-0.51

Correlation Coefficient

Dear Cashmere  Rosinbomb

Excellent diversification

The 3 months correlation between Dear and Rosinbomb is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Dear Cashmere Holding and Rosinbomb in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rosinbomb and Dear Cashmere 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 Dear Cashmere Holding are associated (or correlated) with Rosinbomb. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rosinbomb has no effect on the direction of Dear Cashmere i.e., Dear Cashmere and Rosinbomb go up and down completely randomly.

Pair Corralation between Dear Cashmere and Rosinbomb

Given the investment horizon of 90 days Dear Cashmere Holding is expected to under-perform the Rosinbomb. In addition to that, Dear Cashmere is 1.2 times more volatile than Rosinbomb. It trades about -0.06 of its total potential returns per unit of risk. Rosinbomb is currently generating about 0.2 per unit of volatility. If you would invest  0.40  in Rosinbomb on December 28, 2024 and sell it today you would earn a total of  0.59  from holding Rosinbomb or generate 147.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Dear Cashmere Holding  vs.  Rosinbomb

Dear Cashmere Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Dear Cashmere Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Even with abnormal performance in the last few months, the Stock's fundamental indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Rosinbomb

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rosinbomb are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile basic indicators, Rosinbomb displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Dear Cashmere and Rosinbomb

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

The idea behind Dear Cashmere Holding and Rosinbomb 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 Stocks Directory module to find actively traded stocks across global markets.