Correlation Between Modi Rubber and COSMO FIRST

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

Diversification Opportunities for Modi Rubber and COSMO FIRST

0.22
  Correlation Coefficient

Modest diversification

The 3 months correlation between Modi and COSMO is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Modi Rubber Limited and COSMO FIRST LIMITED in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COSMO FIRST LIMITED and Modi Rubber 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 Modi Rubber Limited are associated (or correlated) with COSMO FIRST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COSMO FIRST LIMITED has no effect on the direction of Modi Rubber i.e., Modi Rubber and COSMO FIRST go up and down completely randomly.

Pair Corralation between Modi Rubber and COSMO FIRST

Assuming the 90 days trading horizon Modi Rubber Limited is expected to generate 1.86 times more return on investment than COSMO FIRST. However, Modi Rubber is 1.86 times more volatile than COSMO FIRST LIMITED. It trades about 0.01 of its potential returns per unit of risk. COSMO FIRST LIMITED is currently generating about -0.24 per unit of risk. If you would invest  11,208  in Modi Rubber Limited on August 31, 2025 and sell it today you would lose (197.00) from holding Modi Rubber Limited or give up 1.76% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Modi Rubber Limited  vs.  COSMO FIRST LIMITED

 Performance 
       Timeline  
Modi Rubber Limited 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Modi Rubber Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Modi Rubber is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.
COSMO FIRST LIMITED 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days COSMO FIRST LIMITED has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Modi Rubber and COSMO FIRST Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Modi Rubber and COSMO FIRST

The main advantage of trading using opposite Modi Rubber and COSMO FIRST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modi Rubber position performs unexpectedly, COSMO FIRST 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 COSMO FIRST will offset losses from the drop in COSMO FIRST's long position.
The idea behind Modi Rubber Limited and COSMO FIRST 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.
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.

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