Correlation Between Nucleus Software and COSMO FIRST

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

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

Diversification Opportunities for Nucleus Software and COSMO FIRST

0.39

Correlation Coefficient

Nucleus Software  COSMO FIRST

Weak diversification

The 3 months correlation between Nucleus and COSMO is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Nucleus Software Exports 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 Nucleus Software 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 Nucleus Software Exports 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 Nucleus Software i.e., Nucleus Software and COSMO FIRST go up and down completely randomly.

Pair Corralation between Nucleus Software and COSMO FIRST

Assuming the 90 days trading horizon Nucleus Software Exports is expected to under-perform the COSMO FIRST. But the stock apears to be less risky and, when comparing its historical volatility, Nucleus Software Exports is 1.26 times less risky than COSMO FIRST. The stock trades about -0.16 of its potential returns per unit of risk. The COSMO FIRST LIMITED is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  78,220  in COSMO FIRST LIMITED on September 4, 2024 and sell it today you would earn a total of  6,725  from holding COSMO FIRST LIMITED or generate 8.6% return on investment over 90 days.

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

Nucleus Software Exports  vs.  COSMO FIRST LIMITED

Nucleus Software Exports

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nucleus Software Exports has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

COSMO FIRST LIMITED

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, COSMO FIRST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nucleus Software and COSMO FIRST

The main advantage of trading using opposite Nucleus Software and COSMO FIRST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nucleus Software 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 Nucleus Software Exports 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.