Correlation Between Cogent Communications and Global Ship
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Global Ship 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 Global Ship 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 Global Ship Lease, you can compare the effects of market volatilities on Cogent Communications and Global Ship 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 Global Ship. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Global Ship.
Diversification Opportunities for Cogent Communications and Global Ship
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cogent and Global is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Global Ship Lease in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Ship Lease 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 Global Ship. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Ship Lease has no effect on the direction of Cogent Communications i.e., Cogent Communications and Global Ship go up and down completely randomly.
Pair Corralation between Cogent Communications and Global Ship
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.14 times more return on investment than Global Ship. However, Cogent Communications is 1.14 times more volatile than Global Ship Lease. It trades about 0.16 of its potential returns per unit of risk. Global Ship Lease is currently generating about -0.04 per unit of risk. If you would invest 7,209 in Cogent Communications Holdings on September 1, 2024 and sell it today you would earn a total of 541.00 from holding Cogent Communications Holdings or generate 7.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Global Ship Lease
Performance |
| Timeline |
| Cogent Communications |
| Global Ship Lease |
Cogent Communications and Global Ship Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Global Ship
The main advantage of trading using opposite Cogent Communications and Global Ship positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Global Ship 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 Global Ship will offset losses from the drop in Global Ship's long position.| Cogent Communications vs. Perma Fix Environmental Services | Cogent Communications vs. Nippon Steel | Cogent Communications vs. Insteel Industries | Cogent Communications vs. Caltagirone SpA |
| Global Ship vs. Clarkson PLC | Global Ship vs. Wilh Wilhelmsen Holding | Global Ship vs. Superior Plus Corp | Global Ship vs. NMI Holdings |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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