Correlation Between Cogent Communications and Aedas Homes
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Aedas Homes 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 Aedas Homes 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 Aedas Homes SA, you can compare the effects of market volatilities on Cogent Communications and Aedas Homes 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 Aedas Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Aedas Homes.
Diversification Opportunities for Cogent Communications and Aedas Homes
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and Aedas is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Aedas Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aedas Homes SA 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 Aedas Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aedas Homes SA has no effect on the direction of Cogent Communications i.e., Cogent Communications and Aedas Homes go up and down completely randomly.
Pair Corralation between Cogent Communications and Aedas Homes
Assuming the 90 days trading horizon Cogent Communications is expected to generate 2.04 times less return on investment than Aedas Homes. In addition to that, Cogent Communications is 1.19 times more volatile than Aedas Homes SA. It trades about 0.05 of its total potential returns per unit of risk. Aedas Homes SA is currently generating about 0.12 per unit of volatility. If you would invest 1,328 in Aedas Homes SA on August 29, 2024 and sell it today you would earn a total of 1,157 from holding Aedas Homes SA or generate 87.12% 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. Aedas Homes SA
Performance |
| Timeline |
| Cogent Communications |
| Aedas Homes SA |
Cogent Communications and Aedas Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Aedas Homes
The main advantage of trading using opposite Cogent Communications and Aedas Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Aedas Homes 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 Aedas Homes will offset losses from the drop in Aedas Homes' long position.| Cogent Communications vs. Verizon Communications | Cogent Communications vs. ATT Inc | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
| Aedas Homes vs. COMPUTERSHARE | Aedas Homes vs. Computer And Technologies | Aedas Homes vs. Cogent Communications Holdings | Aedas Homes vs. Iridium Communications |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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