Correlation Between COSMO FIRST and Kewal Kiran

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

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

Diversification Opportunities for COSMO FIRST and Kewal Kiran

-0.11

Correlation Coefficient

COSMO FIRST  Kewal Kiran

Good diversification

The 3 months correlation between COSMO and Kewal is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Kewal Kiran Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kewal Kiran Clothing and COSMO FIRST 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 COSMO FIRST LIMITED are associated (or correlated) with Kewal Kiran. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kewal Kiran Clothing has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Kewal Kiran go up and down completely randomly.

Pair Corralation between COSMO FIRST and Kewal Kiran

Assuming the 90 days trading horizon COSMO FIRST LIMITED is expected to generate 1.5 times more return on investment than Kewal Kiran. However, COSMO FIRST is 1.5 times more volatile than Kewal Kiran Clothing. It trades about 0.05 of its potential returns per unit of risk. Kewal Kiran Clothing is currently generating about 0.01 per unit of risk. If you would invest  80,705  in COSMO FIRST LIMITED on September 12, 2024 and sell it today you would earn a total of  4,255  from holding COSMO FIRST LIMITED or generate 5.27% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Kewal Kiran Clothing

COSMO FIRST LIMITED

Risk-Adjusted Performance

3 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, COSMO FIRST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Kewal Kiran Clothing

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Kewal Kiran Clothing has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Kewal Kiran is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COSMO FIRST and Kewal Kiran

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

The idea behind COSMO FIRST LIMITED and Kewal Kiran Clothing 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 Transaction History module to view history of all your transactions and understand their impact on performance.