Correlation Between Cogent Communications and WUXI BIOLOGICS-000000
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and WUXI BIOLOGICS-000000 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 WUXI BIOLOGICS-000000 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cogent Communications Holdings and WUXI BIOLOGICS 00000083, you can compare the effects of market volatilities on Cogent Communications and WUXI BIOLOGICS-000000 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 WUXI BIOLOGICS-000000. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and WUXI BIOLOGICS-000000.
Diversification Opportunities for Cogent Communications and WUXI BIOLOGICS-000000
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and WUXI is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and WUXI BIOLOGICS 00000083 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WUXI BIOLOGICS 00000083 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 Holdings are associated (or correlated) with WUXI BIOLOGICS-000000. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WUXI BIOLOGICS 00000083 has no effect on the direction of Cogent Communications i.e., Cogent Communications and WUXI BIOLOGICS-000000 go up and down completely randomly.
Pair Corralation between Cogent Communications and WUXI BIOLOGICS-000000
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.77 times more return on investment than WUXI BIOLOGICS-000000. However, Cogent Communications Holdings is 1.3 times less risky than WUXI BIOLOGICS-000000. It trades about 0.1 of its potential returns per unit of risk. WUXI BIOLOGICS 00000083 is currently generating about -0.04 per unit of risk. If you would invest 7,357 in Cogent Communications Holdings on September 2, 2024 and sell it today you would earn a total of 343.00 from holding Cogent Communications Holdings or generate 4.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. WUXI BIOLOGICS 00000083
Performance |
| Timeline |
| Cogent Communications |
| WUXI BIOLOGICS 00000083 |
Cogent Communications and WUXI BIOLOGICS-000000 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and WUXI BIOLOGICS-000000
The main advantage of trading using opposite Cogent Communications and WUXI BIOLOGICS-000000 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, WUXI BIOLOGICS-000000 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 WUXI BIOLOGICS-000000 will offset losses from the drop in WUXI BIOLOGICS-000000's long position.| Cogent Communications vs. Calibre Mining Corp | Cogent Communications vs. FUYO GENERAL LEASE | Cogent Communications vs. MINCO SILVER | Cogent Communications vs. Apollo Investment Corp |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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