Correlation Between TELES Informationstech and CosmoSteel Holdings

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

By analyzing existing cross correlation between TELES Informationstechnologien AG and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on TELES Informationstech and CosmoSteel Holdings 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 TELES Informationstech with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELES Informationstech and CosmoSteel Holdings.

Diversification Opportunities for TELES Informationstech and CosmoSteel Holdings

-0.62

Correlation Coefficient

TELES Informationstech  CosmoSteel Holdings

Excellent diversification

The 3 months correlation between TELES and CosmoSteel is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding TELES Informationstechnologien and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and TELES Informationstech 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 TELES Informationstechnologien AG are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of TELES Informationstech i.e., TELES Informationstech and CosmoSteel Holdings go up and down completely randomly.

Pair Corralation between TELES Informationstech and CosmoSteel Holdings

Assuming the 90 days trading horizon TELES Informationstechnologien AG is expected to under-perform the CosmoSteel Holdings. In addition to that, TELES Informationstech is 1.6 times more volatile than CosmoSteel Holdings Limited. It trades about -0.07 of its total potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.03 per unit of volatility. If you would invest  6.75  in CosmoSteel Holdings Limited on December 3, 2024 and sell it today you would earn a total of  1.25  from holding CosmoSteel Holdings Limited or generate 18.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.49%
Values	Daily Returns

TELES Informationstechnologien  vs.  CosmoSteel Holdings Limited

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals 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.

CosmoSteel Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CosmoSteel Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TELES Informationstech and CosmoSteel Holdings

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

The idea behind TELES Informationstechnologien AG and CosmoSteel Holdings 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..