Correlation Between LAMB and Cosmos
Can any of the company-specific risk be diversified away by investing in both LAMB and Cosmos 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 LAMB and Cosmos into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LAMB and Cosmos, you can compare the effects of market volatilities on LAMB and Cosmos 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 LAMB with a short position of Cosmos. Check out your portfolio center. Please also check ongoing floating volatility patterns of LAMB and Cosmos.
Diversification Opportunities for LAMB and Cosmos
Very weak diversification
The 3 months correlation between LAMB and Cosmos is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding LAMB and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and LAMB 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 LAMB are associated (or correlated) with Cosmos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cosmos has no effect on the direction of LAMB i.e., LAMB and Cosmos go up and down completely randomly.
Pair Corralation between LAMB and Cosmos
Assuming the 90 days trading horizon LAMB is expected to generate 1.75 times more return on investment than Cosmos. However, LAMB is 1.75 times more volatile than Cosmos. It trades about -0.18 of its potential returns per unit of risk. Cosmos is currently generating about -0.35 per unit of risk. If you would invest 0.99 in LAMB on January 26, 2024 and sell it today you would lose (0.34) from holding LAMB or give up 34.28% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
LAMB vs. Cosmos
Performance |
| Timeline |
| LAMB |
| Cosmos |
LAMB and Cosmos Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LAMB and Cosmos
The main advantage of trading using opposite LAMB and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LAMB position performs unexpectedly, Cosmos 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 Cosmos will offset losses from the drop in Cosmos' long position.The idea behind LAMB and Cosmos 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
Other Complementary Tools
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Transaction History View history of all your transactions and understand their impact on performance | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |