Correlation Between Cogent Communications and AVITA Medical
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and AVITA Medical 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 AVITA Medical 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 AVITA Medical, you can compare the effects of market volatilities on Cogent Communications and AVITA Medical 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 AVITA Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and AVITA Medical.
Diversification Opportunities for Cogent Communications and AVITA Medical
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cogent and AVITA is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and AVITA Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVITA Medical 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 AVITA Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVITA Medical has no effect on the direction of Cogent Communications i.e., Cogent Communications and AVITA Medical go up and down completely randomly.
Pair Corralation between Cogent Communications and AVITA Medical
Assuming the 90 days trading horizon Cogent Communications is expected to generate 1.02 times less return on investment than AVITA Medical. But when comparing it to its historical volatility, Cogent Communications Holdings is 1.56 times less risky than AVITA Medical. It trades about 0.15 of its potential returns per unit of risk. AVITA Medical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 163.00 in AVITA Medical on September 2, 2024 and sell it today you would earn a total of 77.00 from holding AVITA Medical or generate 47.24% 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. AVITA Medical
Performance |
| Timeline |
| Cogent Communications |
| AVITA Medical |
Cogent Communications and AVITA Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and AVITA Medical
The main advantage of trading using opposite Cogent Communications and AVITA Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, AVITA Medical 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 AVITA Medical will offset losses from the drop in AVITA Medical'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 |
| AVITA Medical vs. CECO ENVIRONMENTAL | AVITA Medical vs. MITSUBISHI STEEL MFG | AVITA Medical vs. SBI Insurance Group | AVITA Medical vs. BLUESCOPE STEEL |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
Other Complementary Tools
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Aroon Oscillator Analyze current equity momentum using Aroon Oscillator and other momentum ratios | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges |