Correlation Between Cosmos and HYN

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

By analyzing existing cross correlation between Cosmos and HYN, you can compare the effects of market volatilities on Cosmos and HYN 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 HYN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and HYN.

Diversification Opportunities for Cosmos and HYN

0.33

Correlation Coefficient

Cosmos  HYN

Weak diversification

The 3 months correlation between Cosmos and HYN is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and HYN in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HYN 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 HYN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HYN has no effect on the direction of Cosmos i.e., Cosmos and HYN go up and down completely randomly.

Pair Corralation between Cosmos and HYN

If you would invest  902.00  in Cosmos on February 6, 2024 and sell it today you would lose (33.00) from holding Cosmos or give up 3.66% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.78%
Values	Daily Returns

Cosmos  vs.  HYN

Cosmos

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cosmos has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, Cosmos is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

HYN

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days HYN has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, HYN is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cosmos and HYN

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

The idea behind Cosmos and HYN 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.