Correlation Between Associated British and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Associated British and Cogent Communications 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 Associated British and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Associated British Foods and Cogent Communications Holdings, you can compare the effects of market volatilities on Associated British and Cogent Communications 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 Associated British with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Associated British and Cogent Communications.
Diversification Opportunities for Associated British and Cogent Communications
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between Associated and Cogent is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Associated British Foods and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Associated British 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 Associated British Foods are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Associated British i.e., Associated British and Cogent Communications go up and down completely randomly.
Pair Corralation between Associated British and Cogent Communications
Assuming the 90 days trading horizon Associated British Foods is expected to generate 0.68 times more return on investment than Cogent Communications. However, Associated British Foods is 1.47 times less risky than Cogent Communications. It trades about -0.08 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.12 per unit of risk. If you would invest 2,702 in Associated British Foods on September 12, 2024 and sell it today you would lose (64.00) from holding Associated British Foods or give up 2.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Associated British Foods vs. Cogent Communications Holdings
Performance |
| Timeline |
| Associated British Foods |
| Cogent Communications |
Associated British and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Associated British and Cogent Communications
The main advantage of trading using opposite Associated British and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Associated British position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| Associated British vs. Carsales | Associated British vs. Sunstone Hotel Investors | Associated British vs. Xenia Hotels Resorts | Associated British vs. Salesforce |
| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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