Correlation Between Cogent Communications and KT
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and KT 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 Cogent Communications and KT into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogent Communications Group and KT Corporation, you can compare the effects of market volatilities on Cogent Communications and KT 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 Cogent Communications with a short position of KT. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and KT.
Diversification Opportunities for Cogent Communications and KT
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and KT is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and KT Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KT Corporation and Cogent Communications 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 Cogent Communications Group are associated (or correlated) with KT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KT Corporation has no effect on the direction of Cogent Communications i.e., Cogent Communications and KT go up and down completely randomly.
Pair Corralation between Cogent Communications and KT
Given the investment horizon of 90 days Cogent Communications is expected to generate 2.64 times less return on investment than KT. But when comparing it to its historical volatility, Cogent Communications Group is 1.41 times less risky than KT. It trades about 0.06 of its potential returns per unit of risk. KT Corporation is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,555 in KT Corporation on August 24, 2024 and sell it today you would earn a total of 79.00 from holding KT Corporation or generate 5.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Group vs. KT Corp.
Performance |
| Timeline |
| Cogent Communications |
| KT Corporation |
Cogent Communications and KT Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and KT
The main advantage of trading using opposite Cogent Communications and KT positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, KT 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 KT will offset losses from the drop in KT's long position.| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Charter Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. TIM Participacoes SA |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
Other Complementary Tools
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets |