Correlation Between ES Ceramics and Cosmos Technology

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

By analyzing existing cross correlation between ES Ceramics Technology and Cosmos Technology International, you can compare the effects of market volatilities on ES Ceramics and Cosmos Technology 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 ES Ceramics with a short position of Cosmos Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of ES Ceramics and Cosmos Technology.

Diversification Opportunities for ES Ceramics and Cosmos Technology

0.41

Correlation Coefficient

ES Ceramics  Cosmos Technology

Very weak diversification

The 3 months correlation between 0100 and Cosmos is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding ES Ceramics Technology and Cosmos Technology Internationa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos Technology and ES Ceramics 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 ES Ceramics Technology are associated (or correlated) with Cosmos Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos Technology has no effect on the direction of ES Ceramics i.e., ES Ceramics and Cosmos Technology go up and down completely randomly.

Pair Corralation between ES Ceramics and Cosmos Technology

Assuming the 90 days trading horizon ES Ceramics Technology is expected to generate 1.34 times more return on investment than Cosmos Technology. However, ES Ceramics is 1.34 times more volatile than Cosmos Technology International. It trades about 0.01 of its potential returns per unit of risk. Cosmos Technology International is currently generating about 0.0 per unit of risk. If you would invest  20.00  in ES Ceramics Technology on September 28, 2024 and sell it today you would lose (4.00) from holding ES Ceramics Technology or give up 20.0% of portfolio value over 90 days.

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

ES Ceramics Technology  vs.  Cosmos Technology Internationa

ES Ceramics Technology

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ES Ceramics Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, ES Ceramics is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Cosmos Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Technology International are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Cosmos Technology may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with ES Ceramics and Cosmos Technology

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

The idea behind ES Ceramics Technology and Cosmos Technology International 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.