Correlation Between Open Network and Cosmos

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

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

Diversification Opportunities for Open Network and Cosmos

-0.15

Correlation Coefficient

Open Network  Cosmos

Good diversification

The 3 months correlation between Open and Cosmos is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Open Network and Cosmos in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cosmos and Open Network 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 The Open Network 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 Open Network i.e., Open Network and Cosmos go up and down completely randomly.

Pair Corralation between Open Network and Cosmos

Assuming the 90 days trading horizon The Open Network is expected to generate 1.45 times more return on investment than Cosmos. However, Open Network is 1.45 times more volatile than Cosmos. It trades about 0.11 of its potential returns per unit of risk. Cosmos is currently generating about -0.26 per unit of risk. If you would invest  488.00  in The Open Network on January 30, 2024 and sell it today you would earn a total of  59.00  from holding The Open Network or generate 12.09% return on investment over 90 days.

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

The Open Network  vs.  Cosmos

Open Network

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Open Network are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, Open Network displayed solid returns over the last few months and may actually be approaching a breakup point.

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.

Pair Trading with Open Network and Cosmos

The main advantage of trading using opposite Open Network and Cosmos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Open Network 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 The Open Network 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.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.