Correlation Between Cosmos and DKargo

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Can any of the company-specific risk be diversified away by investing in both Cosmos and DKargo 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 Cosmos and DKargo into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and dKargo, you can compare the effects of market volatilities on Cosmos and DKargo 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 Cosmos with a short position of DKargo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and DKargo.

Diversification Opportunities for Cosmos and DKargo

0.94
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Cosmos and DKargo is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and dKargo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on dKargo and Cosmos 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 Cosmos are associated (or correlated) with DKargo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of dKargo has no effect on the direction of Cosmos i.e., Cosmos and DKargo go up and down completely randomly.

Pair Corralation between Cosmos and DKargo

Assuming the 90 days trading horizon Cosmos is expected to generate 0.91 times more return on investment than DKargo. However, Cosmos is 1.1 times less risky than DKargo. It trades about 0.0 of its potential returns per unit of risk. dKargo is currently generating about 0.0 per unit of risk. If you would invest  2,463  in Cosmos on December 30, 2023 and sell it today you would lose (1,230) from holding Cosmos or give up 49.94% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

Cosmos  vs.  dKargo

 Performance 
       Timeline  
Cosmos 

Risk-Adjusted Performance

7 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Cosmos exhibited solid returns over the last few months and may actually be approaching a breakup point.
dKargo 

Risk-Adjusted Performance

6 of 100

 
Low
 
High
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in dKargo are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, DKargo exhibited solid returns over the last few months and may actually be approaching a breakup point.

Cosmos and DKargo Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Cosmos and DKargo

The main advantage of trading using opposite Cosmos and DKargo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, DKargo 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 DKargo will offset losses from the drop in DKargo's long position.
The idea behind Cosmos and dKargo 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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