Correlation Between Perma-Fix Environmental and CosmoSteel Holdings

Can any of the company-specific risk be diversified away by investing in both Perma-Fix Environmental and CosmoSteel Holdings 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 Perma-Fix Environmental and CosmoSteel Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Fix Environmental Services and CosmoSteel Holdings Limited, you can compare the effects of market volatilities on Perma-Fix Environmental and CosmoSteel Holdings 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 Perma-Fix Environmental with a short position of CosmoSteel Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma-Fix Environmental and CosmoSteel Holdings.

Diversification Opportunities for Perma-Fix Environmental and CosmoSteel Holdings

-0.63

Correlation Coefficient

Perma-Fix Environmental  CosmoSteel Holdings

Excellent diversification

The 3 months correlation between Perma-Fix and CosmoSteel is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Perma Fix Environmental Servic and CosmoSteel Holdings Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CosmoSteel Holdings and Perma-Fix Environmental 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 Perma Fix Environmental Services are associated (or correlated) with CosmoSteel Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CosmoSteel Holdings has no effect on the direction of Perma-Fix Environmental i.e., Perma-Fix Environmental and CosmoSteel Holdings go up and down completely randomly.

Pair Corralation between Perma-Fix Environmental and CosmoSteel Holdings

Assuming the 90 days trading horizon Perma-Fix Environmental is expected to generate 2.74 times less return on investment than CosmoSteel Holdings. In addition to that, Perma-Fix Environmental is 1.31 times more volatile than CosmoSteel Holdings Limited. It trades about 0.02 of its total potential returns per unit of risk. CosmoSteel Holdings Limited is currently generating about 0.06 per unit of volatility. If you would invest  6.40  in CosmoSteel Holdings Limited on September 25, 2024 and sell it today you would earn a total of  0.60  from holding CosmoSteel Holdings Limited or generate 9.38% return on investment over 90 days.

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

Perma Fix Environmental Servic  vs.  CosmoSteel Holdings Limited

Perma Fix Environmental

Risk-Adjusted Performance

1 of 100

Weak

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

CosmoSteel Holdings

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CosmoSteel Holdings Limited are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, CosmoSteel Holdings may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Perma-Fix Environmental and CosmoSteel Holdings

The main advantage of trading using opposite Perma-Fix Environmental and CosmoSteel Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perma-Fix Environmental position performs unexpectedly, CosmoSteel Holdings 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 CosmoSteel Holdings will offset losses from the drop in CosmoSteel Holdings' long position.

The idea behind Perma Fix Environmental Services and CosmoSteel Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.