Correlation Between Cogent Communications and Cairo Communication
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Cairo Communication 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 Cairo Communication 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 Cairo Communication SpA, you can compare the effects of market volatilities on Cogent Communications and Cairo Communication 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 Cairo Communication. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Cairo Communication.
Diversification Opportunities for Cogent Communications and Cairo Communication
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cogent and Cairo is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Cairo Communication SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cairo Communication SpA 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 Cairo Communication. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cairo Communication SpA has no effect on the direction of Cogent Communications i.e., Cogent Communications and Cairo Communication go up and down completely randomly.
Pair Corralation between Cogent Communications and Cairo Communication
Assuming the 90 days trading horizon Cogent Communications is expected to generate 2.0 times less return on investment than Cairo Communication. In addition to that, Cogent Communications is 1.11 times more volatile than Cairo Communication SpA. It trades about 0.03 of its total potential returns per unit of risk. Cairo Communication SpA is currently generating about 0.08 per unit of volatility. If you would invest 128.00 in Cairo Communication SpA on October 11, 2024 and sell it today you would earn a total of 110.00 from holding Cairo Communication SpA or generate 85.94% 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. Cairo Communication SpA
Performance |
| Timeline |
| Cogent Communications |
| Cairo Communication SpA |
Cogent Communications and Cairo Communication Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Cairo Communication
The main advantage of trading using opposite Cogent Communications and Cairo Communication positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Cairo Communication 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 Cairo Communication will offset losses from the drop in Cairo Communication's long position.| Cogent Communications vs. NTT DATA | Cogent Communications vs. TERADATA | Cogent Communications vs. Alliance Data Systems | Cogent Communications vs. MICRONIC MYDATA |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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