Correlation Between Cosmos Health and World Oil

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

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

Diversification Opportunities for Cosmos Health and World Oil

-0.6

Correlation Coefficient

Cosmos Health  World Oil

Excellent diversification

The 3 months correlation between Cosmos and World is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos Health and World Oil Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on World Oil Group and Cosmos Health 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 Health are associated (or correlated) with World Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of World Oil Group has no effect on the direction of Cosmos Health i.e., Cosmos Health and World Oil go up and down completely randomly.

Pair Corralation between Cosmos Health and World Oil

Given the investment horizon of 90 days Cosmos Health is expected to generate 0.73 times more return on investment than World Oil. However, Cosmos Health is 1.37 times less risky than World Oil. It trades about 0.16 of its potential returns per unit of risk. World Oil Group is currently generating about 0.01 per unit of risk. If you would invest  47.00  in Cosmos Health on May 28, 2025 and sell it today you would earn a total of  37.00  from holding Cosmos Health or generate 78.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.41%
Values	Daily Returns

Cosmos Health  vs.  World Oil Group

Cosmos Health

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cosmos Health are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Cosmos Health displayed solid returns over the last few months and may actually be approaching a breakup point.

World Oil Group

Risk-Adjusted Performance

Weakest

Over the last 90 days World Oil Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, World Oil is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Cosmos Health and World Oil

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

The idea behind Cosmos Health and World Oil Group 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.