Correlation Between TECSYS and Cobalt Power

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

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

Diversification Opportunities for TECSYS and Cobalt Power

-0.82

Correlation Coefficient

TECSYS  Cobalt Power

Pay attention - limited upside

The 3 months correlation between TECSYS and Cobalt is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding TECSYS Inc and Cobalt Power Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cobalt Power Group and TECSYS 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 TECSYS Inc are associated (or correlated) with Cobalt Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cobalt Power Group has no effect on the direction of TECSYS i.e., TECSYS and Cobalt Power go up and down completely randomly.

Pair Corralation between TECSYS and Cobalt Power

Assuming the 90 days trading horizon TECSYS is expected to generate 12.93 times less return on investment than Cobalt Power. But when comparing it to its historical volatility, TECSYS Inc is 9.88 times less risky than Cobalt Power. It trades about 0.06 of its potential returns per unit of risk. Cobalt Power Group is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  15.00  in Cobalt Power Group on October 3, 2024 and sell it today you would lose (12.50) from holding Cobalt Power Group or give up 83.33% of portfolio value over 90 days.

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

TECSYS Inc  vs.  Cobalt Power Group

TECSYS Inc

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TECSYS Inc are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TECSYS displayed solid returns over the last few months and may actually be approaching a breakup point.

Cobalt Power Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cobalt Power Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in February 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with TECSYS and Cobalt Power

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

The idea behind TECSYS Inc and Cobalt Power Group 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.