Correlation Between Caltagirone SpA and COSMOSTEEL HLDGS

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

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

Diversification Opportunities for Caltagirone SpA and COSMOSTEEL HLDGS

-0.42

Correlation Coefficient

Caltagirone SpA  COSMOSTEEL HLDGS

Very good diversification

The 3 months correlation between Caltagirone and COSMOSTEEL is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Caltagirone SpA and COSMOSTEEL HLDGS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMOSTEEL HLDGS and Caltagirone SpA 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 Caltagirone SpA are associated (or correlated) with COSMOSTEEL HLDGS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMOSTEEL HLDGS has no effect on the direction of Caltagirone SpA i.e., Caltagirone SpA and COSMOSTEEL HLDGS go up and down completely randomly.

Pair Corralation between Caltagirone SpA and COSMOSTEEL HLDGS

Assuming the 90 days trading horizon Caltagirone SpA is expected to generate 1.19 times more return on investment than COSMOSTEEL HLDGS. However, Caltagirone SpA is 1.19 times more volatile than COSMOSTEEL HLDGS. It trades about 0.08 of its potential returns per unit of risk. COSMOSTEEL HLDGS is currently generating about 0.03 per unit of risk. If you would invest  530.00  in Caltagirone SpA on September 3, 2024 and sell it today you would earn a total of  64.00  from holding Caltagirone SpA or generate 12.08% return on investment over 90 days.

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

Caltagirone SpA  vs.  COSMOSTEEL HLDGS

Caltagirone SpA

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Caltagirone SpA are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Caltagirone SpA unveiled solid returns over the last few months and may actually be approaching a breakup point.

COSMOSTEEL HLDGS

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in COSMOSTEEL HLDGS are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, COSMOSTEEL HLDGS is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Caltagirone SpA and COSMOSTEEL HLDGS

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

The idea behind Caltagirone SpA and COSMOSTEEL HLDGS 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.