Correlation Between Exide Industries and COSMO FIRST

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

By analyzing existing cross correlation between Exide Industries Limited and COSMO FIRST LIMITED, you can compare the effects of market volatilities on Exide Industries and COSMO FIRST 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 Exide Industries with a short position of COSMO FIRST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Exide Industries and COSMO FIRST.

Diversification Opportunities for Exide Industries and COSMO FIRST

-0.38

Correlation Coefficient

Exide Industries  COSMO FIRST

Very good diversification

The 3 months correlation between Exide and COSMO is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Exide Industries Limited and COSMO FIRST LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMO FIRST LIMITED and Exide Industries 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 Exide Industries Limited are associated (or correlated) with COSMO FIRST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMO FIRST LIMITED has no effect on the direction of Exide Industries i.e., Exide Industries and COSMO FIRST go up and down completely randomly.

Pair Corralation between Exide Industries and COSMO FIRST

Assuming the 90 days trading horizon Exide Industries Limited is expected to under-perform the COSMO FIRST. But the stock apears to be less risky and, when comparing its historical volatility, Exide Industries Limited is 2.04 times less risky than COSMO FIRST. The stock trades about -0.24 of its potential returns per unit of risk. The COSMO FIRST LIMITED is currently generating about -0.09 of returns per unit of risk over similar time horizon. If you would invest  88,770  in COSMO FIRST LIMITED on October 24, 2024 and sell it today you would lose (7,405) from holding COSMO FIRST LIMITED or give up 8.34% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Exide Industries Limited  vs.  COSMO FIRST LIMITED

Exide Industries

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Exide Industries Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

COSMO FIRST LIMITED

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, COSMO FIRST may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Exide Industries and COSMO FIRST

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

The idea behind Exide Industries Limited and COSMO FIRST 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 Global Correlations module to find global opportunities by holding instruments from different markets.