Correlation Between Deutsche Telekom and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Deutsche Telekom 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 Deutsche Telekom and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Deutsche Telekom AG and Cogent Communications Holdings, you can compare the effects of market volatilities on Deutsche Telekom 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 Deutsche Telekom with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Deutsche Telekom and Cogent Communications.
Diversification Opportunities for Deutsche Telekom and Cogent Communications
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Deutsche and Cogent is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Deutsche Telekom AG and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Deutsche Telekom 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 Deutsche Telekom AG 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 Deutsche Telekom i.e., Deutsche Telekom and Cogent Communications go up and down completely randomly.
Pair Corralation between Deutsche Telekom and Cogent Communications
Assuming the 90 days trading horizon Deutsche Telekom AG is expected to generate 0.75 times more return on investment than Cogent Communications. However, Deutsche Telekom AG is 1.34 times less risky than Cogent Communications. It trades about 0.31 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.14 per unit of risk. If you would invest 3,077 in Deutsche Telekom AG on November 29, 2024 and sell it today you would earn a total of 307.00 from holding Deutsche Telekom AG or generate 9.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Deutsche Telekom AG vs. Cogent Communications Holdings
Performance |
| Timeline |
| Deutsche Telekom |
| Cogent Communications |
Deutsche Telekom and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Deutsche Telekom and Cogent Communications
The main advantage of trading using opposite Deutsche Telekom and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Deutsche Telekom 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.| Deutsche Telekom vs. Endeavour Mining PLC | Deutsche Telekom vs. United Rentals | Deutsche Telekom vs. UNITED RENTALS | Deutsche Telekom vs. Sixt Leasing SE |
| Cogent Communications vs. Salesforce | Cogent Communications vs. Austevoll Seafood ASA | Cogent Communications vs. CONAGRA FOODS | Cogent Communications vs. CANON MARKETING JP |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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