Correlation Between CosmoSteel Holdings and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both CosmoSteel Holdings and Insteel Industries 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 CosmoSteel Holdings and Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CosmoSteel Holdings Limited and Insteel Industries, you can compare the effects of market volatilities on CosmoSteel Holdings and Insteel Industries 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 CosmoSteel Holdings with a short position of Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of CosmoSteel Holdings and Insteel Industries.
Diversification Opportunities for CosmoSteel Holdings and Insteel Industries
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between CosmoSteel and Insteel is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding CosmoSteel Holdings Limited and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries and CosmoSteel Holdings 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 CosmoSteel Holdings Limited are associated (or correlated) with Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of CosmoSteel Holdings i.e., CosmoSteel Holdings and Insteel Industries go up and down completely randomly.
Pair Corralation between CosmoSteel Holdings and Insteel Industries
Assuming the 90 days horizon CosmoSteel Holdings Limited is expected to generate 3.28 times more return on investment than Insteel Industries. However, CosmoSteel Holdings is 3.28 times more volatile than Insteel Industries. It trades about 0.16 of its potential returns per unit of risk. Insteel Industries is currently generating about -0.31 per unit of risk. If you would invest 5.90 in CosmoSteel Holdings Limited on September 25, 2024 and sell it today you would earn a total of 0.85 from holding CosmoSteel Holdings Limited or generate 14.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
CosmoSteel Holdings Limited vs. Insteel Industries
Performance |
Timeline |
CosmoSteel Holdings |
Insteel Industries |
CosmoSteel Holdings and Insteel Industries Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with CosmoSteel Holdings and Insteel Industries
The main advantage of trading using opposite CosmoSteel Holdings and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CosmoSteel Holdings position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.CosmoSteel Holdings vs. WW Grainger | CosmoSteel Holdings vs. Fastenal Company | CosmoSteel Holdings vs. Watsco Inc | CosmoSteel Holdings vs. WATSCO INC B |
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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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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