Correlation Between Retail Food and Cosmo Metals

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

By analyzing existing cross correlation between Retail Food Group and Cosmo Metals, you can compare the effects of market volatilities on Retail Food and Cosmo Metals 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 Retail Food with a short position of Cosmo Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Retail Food and Cosmo Metals.

Diversification Opportunities for Retail Food and Cosmo Metals

0.29

Correlation Coefficient

Retail Food  Cosmo Metals

Modest diversification

The 3 months correlation between Retail and Cosmo is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Retail Food Group and Cosmo Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmo Metals and Retail Food 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 Retail Food Group are associated (or correlated) with Cosmo Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmo Metals has no effect on the direction of Retail Food i.e., Retail Food and Cosmo Metals go up and down completely randomly.

Pair Corralation between Retail Food and Cosmo Metals

Assuming the 90 days trading horizon Retail Food Group is expected to under-perform the Cosmo Metals. But the stock apears to be less risky and, when comparing its historical volatility, Retail Food Group is 2.71 times less risky than Cosmo Metals. The stock trades about -0.12 of its potential returns per unit of risk. The Cosmo Metals is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  2.20  in Cosmo Metals on December 21, 2024 and sell it today you would lose (0.30) from holding Cosmo Metals or give up 13.64% of portfolio value over 90 days.

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

Retail Food Group  vs.  Cosmo Metals

Retail Food Group

Risk-Adjusted Performance

Very Weak

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

Cosmo Metals

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cosmo Metals has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Cosmo Metals may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Retail Food and Cosmo Metals

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

The idea behind Retail Food Group and Cosmo Metals 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.