Correlation Between Cogent Communications and Postal Savings
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Postal Savings 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 Postal Savings 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 Postal Savings Bank, you can compare the effects of market volatilities on Cogent Communications and Postal Savings 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 Postal Savings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Postal Savings.
Diversification Opportunities for Cogent Communications and Postal Savings
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Cogent and Postal is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Postal Savings Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Postal Savings Bank 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 Postal Savings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Postal Savings Bank has no effect on the direction of Cogent Communications i.e., Cogent Communications and Postal Savings go up and down completely randomly.
Pair Corralation between Cogent Communications and Postal Savings
Assuming the 90 days trading horizon Cogent Communications is expected to generate 2.34 times less return on investment than Postal Savings. But when comparing it to its historical volatility, Cogent Communications Holdings is 4.01 times less risky than Postal Savings. It trades about 0.16 of its potential returns per unit of risk. Postal Savings Bank is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 25.00 in Postal Savings Bank on September 19, 2024 and sell it today you would earn a total of 28.00 from holding Postal Savings Bank or generate 112.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Postal Savings Bank
Performance |
| Timeline |
| Cogent Communications |
| Postal Savings Bank |
Cogent Communications and Postal Savings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Postal Savings
The main advantage of trading using opposite Cogent Communications and Postal Savings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Postal Savings 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 Postal Savings will offset losses from the drop in Postal Savings' 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 |
| Postal Savings vs. POSBO UNSPADRS20YC1 | Postal Savings vs. UTD OV BK LOC ADR1 | Postal Savings vs. Superior Plus Corp | Postal Savings vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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