Correlation Between Cosmos and BeefyFinance

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Can any of the company-specific risk be diversified away by investing in both Cosmos and BeefyFinance 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 and BeefyFinance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cosmos and BeefyFinance, you can compare the effects of market volatilities on Cosmos and BeefyFinance 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 with a short position of BeefyFinance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cosmos and BeefyFinance.

Diversification Opportunities for Cosmos and BeefyFinance

0.45
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Cosmos and BeefyFinance is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cosmos and Beefy.Finance in the same portfolio assuming nothing else is changed. The correlation between historical prices or returns on BeefyFinance and Cosmos 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 are associated (or correlated) with BeefyFinance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BeefyFinance has no effect on the direction of Cosmos i.e., Cosmos and BeefyFinance go up and down completely randomly.

Pair Corralation between Cosmos and BeefyFinance

Assuming the 90 days trading horizon Cosmos is expected to under-perform the BeefyFinance. But the crypto coin apears to be less risky and, when comparing its historical volatility, Cosmos is 22.32 times less risky than BeefyFinance. The crypto coin trades about -0.18 of its potential returns per unit of risk. The BeefyFinance is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  164,113  in BeefyFinance on February 15, 2022 and sell it today you would lose (121,656)  from holding BeefyFinance or give up 74.13% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Cosmos  vs.  Beefy.Finance

 Performance (%) 
      Timeline 
Cosmos 
Cosmos Performance
0 of 100
Over the last 90 days Cosmos has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Crypto's basic indicators remain somewhat strong which may send shares a bit higher in June 2022. The current disturbance may also be a sign of long term up-swing for Cosmos investors.

Cosmos Price Channel

BeefyFinance 
BeefyFinance Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BeefyFinance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak technical and fundamental indicators, BeefyFinance sustained solid returns over the last few months and may actually be approaching a breakup point.

BeefyFinance Price Channel

Cosmos and BeefyFinance Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Cosmos and BeefyFinance

The main advantage of trading using opposite Cosmos and BeefyFinance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cosmos position performs unexpectedly, BeefyFinance 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 BeefyFinance will offset losses from the drop in BeefyFinance's long position.
The idea behind Cosmos and BeefyFinance 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.

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