Correlation Between COSMO FIRST and Ravi Kumar

Can any of the company-specific risk be diversified away by investing in both COSMO FIRST and Ravi Kumar 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 Ravi Kumar 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 Ravi Kumar Distilleries, you can compare the effects of market volatilities on COSMO FIRST and Ravi Kumar 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 Ravi Kumar. Check out your portfolio center. Please also check ongoing floating volatility patterns of COSMO FIRST and Ravi Kumar.

Diversification Opportunities for COSMO FIRST and Ravi Kumar

0.67

Correlation Coefficient

COSMO FIRST  Ravi Kumar

Poor diversification

The 3 months correlation between COSMO and Ravi is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Ravi Kumar Distilleries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ravi Kumar Distilleries 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 Ravi Kumar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ravi Kumar Distilleries has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Ravi Kumar go up and down completely randomly.

Pair Corralation between COSMO FIRST and Ravi Kumar

Assuming the 90 days trading horizon COSMO FIRST LIMITED is expected to generate 1.39 times more return on investment than Ravi Kumar. However, COSMO FIRST is 1.39 times more volatile than Ravi Kumar Distilleries. It trades about 0.11 of its potential returns per unit of risk. Ravi Kumar Distilleries is currently generating about 0.01 per unit of risk. If you would invest  76,790  in COSMO FIRST LIMITED on September 27, 2024 and sell it today you would earn a total of  15,535  from holding COSMO FIRST LIMITED or generate 20.23% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Ravi Kumar Distilleries

COSMO FIRST LIMITED

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, COSMO FIRST demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Ravi Kumar Distilleries

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ravi Kumar Distilleries are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ravi Kumar is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with COSMO FIRST and Ravi Kumar

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

The idea behind COSMO FIRST LIMITED and Ravi Kumar Distilleries 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.