Correlation Between Cogent Communications and Ganfeng Lithium
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Ganfeng Lithium 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 Ganfeng Lithium 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 Ganfeng Lithium Co, you can compare the effects of market volatilities on Cogent Communications and Ganfeng Lithium 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 Ganfeng Lithium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Ganfeng Lithium.
Diversification Opportunities for Cogent Communications and Ganfeng Lithium
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and Ganfeng is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Ganfeng Lithium Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ganfeng Lithium 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 Ganfeng Lithium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ganfeng Lithium has no effect on the direction of Cogent Communications i.e., Cogent Communications and Ganfeng Lithium go up and down completely randomly.
Pair Corralation between Cogent Communications and Ganfeng Lithium
Assuming the 90 days trading horizon Cogent Communications is expected to generate 1.19 times less return on investment than Ganfeng Lithium. But when comparing it to its historical volatility, Cogent Communications Holdings is 2.36 times less risky than Ganfeng Lithium. It trades about 0.04 of its potential returns per unit of risk. Ganfeng Lithium Co is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 281.00 in Ganfeng Lithium Co on September 12, 2024 and sell it today you would lose (10.00) from holding Ganfeng Lithium Co or give up 3.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Ganfeng Lithium Co
Performance |
| Timeline |
| Cogent Communications |
| Ganfeng Lithium |
Cogent Communications and Ganfeng Lithium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Ganfeng Lithium
The main advantage of trading using opposite Cogent Communications and Ganfeng Lithium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Ganfeng Lithium 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 Ganfeng Lithium will offset losses from the drop in Ganfeng Lithium's long position.| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications vs. Reliance Steel Aluminum |
| Ganfeng Lithium vs. HEMISPHERE EGY | Ganfeng Lithium vs. United Airlines Holdings | Ganfeng Lithium vs. Cogent Communications Holdings | Ganfeng Lithium vs. SOUTHWEST AIRLINES |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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