Correlation Between NCC and COSMO FIRST

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

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

Diversification Opportunities for NCC and COSMO FIRST

0.77

Correlation Coefficient

NCC  COSMO FIRST

Poor diversification

The 3 months correlation between NCC and COSMO is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NCC 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 NCC 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 NCC 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 NCC i.e., NCC and COSMO FIRST go up and down completely randomly.

Pair Corralation between NCC and COSMO FIRST

Assuming the 90 days trading horizon NCC Limited is expected to under-perform the COSMO FIRST. But the stock apears to be less risky and, when comparing its historical volatility, NCC Limited is 1.06 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 -0.13 of returns per unit of risk over similar time horizon. If you would invest  84,295  in COSMO FIRST LIMITED on December 1, 2024 and sell it today you would lose (24,405) from holding COSMO FIRST LIMITED or give up 28.95% of portfolio value over 90 days.

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

NCC Limited  vs.  COSMO FIRST LIMITED

NCC Limited

Risk-Adjusted Performance

Very Weak

Over the last 90 days NCC Limited 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 technical and fundamental 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.

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.

Pair Trading with NCC and COSMO FIRST

The main advantage of trading using opposite NCC and COSMO FIRST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NCC 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 NCC 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.