Correlation Between Xchanging Solutions and COSMO FIRST

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

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

Diversification Opportunities for Xchanging Solutions and COSMO FIRST

0.55

Correlation Coefficient

Xchanging Solutions  COSMO FIRST

Very weak diversification

The 3 months correlation between Xchanging and COSMO is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Xchanging Solutions Limited 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 Xchanging Solutions 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 Xchanging Solutions Limited 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 Xchanging Solutions i.e., Xchanging Solutions and COSMO FIRST go up and down completely randomly.

Pair Corralation between Xchanging Solutions and COSMO FIRST

Assuming the 90 days trading horizon Xchanging Solutions Limited is expected to under-perform the COSMO FIRST. But the stock apears to be less risky and, when comparing its historical volatility, Xchanging Solutions Limited is 1.0 times less risky than COSMO FIRST. The stock trades about -0.11 of its potential returns per unit of risk. The COSMO FIRST LIMITED is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  78,080  in COSMO FIRST LIMITED on September 1, 2024 and sell it today you would earn a total of  80.00  from holding COSMO FIRST LIMITED or generate 0.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.44%
Values	Daily Returns

Xchanging Solutions Limited  vs.  COSMO FIRST LIMITED

Xchanging Solutions

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xchanging Solutions Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite inconsistent performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

COSMO FIRST LIMITED

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days COSMO FIRST LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, COSMO FIRST is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Xchanging Solutions and COSMO FIRST

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

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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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.