Correlation Between Cogent Communications and Telecom Argentina
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Telecom Argentina 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 Telecom Argentina 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 Telecom Argentina SA, you can compare the effects of market volatilities on Cogent Communications and Telecom Argentina 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 Telecom Argentina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Telecom Argentina.
Diversification Opportunities for Cogent Communications and Telecom Argentina
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogent and Telecom is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and Telecom Argentina SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telecom Argentina 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 Telecom Argentina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telecom Argentina has no effect on the direction of Cogent Communications i.e., Cogent Communications and Telecom Argentina go up and down completely randomly.
Pair Corralation between Cogent Communications and Telecom Argentina
Given the investment horizon of 90 days Cogent Communications is expected to generate 6.41 times less return on investment than Telecom Argentina. But when comparing it to its historical volatility, Cogent Communications Group is 2.43 times less risky than Telecom Argentina. It trades about 0.14 of its potential returns per unit of risk. Telecom Argentina SA is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest 774.00 in Telecom Argentina SA on August 28, 2024 and sell it today you would earn a total of 581.00 from holding Telecom Argentina SA or generate 75.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Group vs. Telecom Argentina SA
Performance |
| Timeline |
| Cogent Communications |
| Telecom Argentina |
Cogent Communications and Telecom Argentina Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Telecom Argentina
The main advantage of trading using opposite Cogent Communications and Telecom Argentina positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Telecom Argentina 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 Telecom Argentina will offset losses from the drop in Telecom Argentina's long position.| Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Ribbon Communications | Cogent Communications vs. Liberty Broadband Srs | Cogent Communications vs. Shenandoah Telecommunications Co |
| Telecom Argentina vs. Telefonica SA ADR | Telecom Argentina vs. Orange SA ADR | Telecom Argentina vs. SK Telecom Co | Telecom Argentina vs. America Movil SAB |
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.
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