Correlation Between Cosmos Group and XS Financial

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

By analyzing existing cross correlation between Cosmos Group Holdings and XS Financial, you can compare the effects of market volatilities on Cosmos Group and XS Financial 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 Group with a short position of XS Financial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos Group and XS Financial.

Diversification Opportunities for Cosmos Group and XS Financial

0.34

Correlation Coefficient

Cosmos Group  XS Financial

Weak diversification

The 3 months correlation between Cosmos and XSHLF is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Group Holdings and XS Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on XS Financial and Cosmos Group 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 Group Holdings are associated (or correlated) with XS Financial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of XS Financial has no effect on the direction of Cosmos Group i.e., Cosmos Group and XS Financial go up and down completely randomly.

Pair Corralation between Cosmos Group and XS Financial

Given the investment horizon of 90 days Cosmos Group Holdings is expected to generate 12.66 times more return on investment than XS Financial. However, Cosmos Group is 12.66 times more volatile than XS Financial. It trades about 0.23 of its potential returns per unit of risk. XS Financial is currently generating about 0.0 per unit of risk. If you would invest  0.00  in Cosmos Group Holdings on February 15, 2024 and sell it today you would earn a total of  0.01  from holding Cosmos Group Holdings or generate 9.223372036854776E16% return on investment over 90 days.

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

Cosmos Group Holdings  vs.  XS Financial

Cosmos Group Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Group Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Cosmos Group reported solid returns over the last few months and may actually be approaching a breakup point.

XS Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days XS Financial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable essential indicators, XS Financial is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Cosmos Group and XS Financial

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

The idea behind Cosmos Group Holdings and XS Financial 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.