Correlation Between COSMO FIRST and Ajanta Pharma

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

Diversification Opportunities for COSMO FIRST and Ajanta Pharma

-0.23

Correlation Coefficient

COSMO FIRST  Ajanta Pharma

Very good diversification

The 3 months correlation between COSMO and Ajanta is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding COSMO FIRST LIMITED and Ajanta Pharma Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ajanta Pharma Limited 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 Ajanta Pharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ajanta Pharma Limited has no effect on the direction of COSMO FIRST i.e., COSMO FIRST and Ajanta Pharma go up and down completely randomly.

Pair Corralation between COSMO FIRST and Ajanta Pharma

Assuming the 90 days trading horizon COSMO FIRST LIMITED is expected to generate 1.8 times more return on investment than Ajanta Pharma. However, COSMO FIRST is 1.8 times more volatile than Ajanta Pharma Limited. It trades about 0.14 of its potential returns per unit of risk. Ajanta Pharma Limited is currently generating about -0.05 per unit of risk. If you would invest  77,740  in COSMO FIRST LIMITED on September 15, 2024 and sell it today you would earn a total of  5,965  from holding COSMO FIRST LIMITED or generate 7.67% return on investment over 90 days.

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

COSMO FIRST LIMITED  vs.  Ajanta Pharma Limited

COSMO FIRST LIMITED

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in COSMO FIRST LIMITED are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain basic indicators, COSMO FIRST may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Ajanta Pharma Limited

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ajanta Pharma Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with COSMO FIRST and Ajanta Pharma

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

The idea behind COSMO FIRST LIMITED and Ajanta Pharma 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.

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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.