Correlation Between Cogent Communications and United Breweries
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and United Breweries 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 United Breweries 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 United Breweries Co, you can compare the effects of market volatilities on Cogent Communications and United Breweries 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 United Breweries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and United Breweries.
Diversification Opportunities for Cogent Communications and United Breweries
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cogent and United is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and United Breweries Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Breweries 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 United Breweries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Breweries has no effect on the direction of Cogent Communications i.e., Cogent Communications and United Breweries go up and down completely randomly.
Pair Corralation between Cogent Communications and United Breweries
Assuming the 90 days trading horizon Cogent Communications is expected to generate 1.14 times less return on investment than United Breweries. In addition to that, Cogent Communications is 1.18 times more volatile than United Breweries Co. It trades about 0.2 of its total potential returns per unit of risk. United Breweries Co is currently generating about 0.26 per unit of volatility. If you would invest 1,110 in United Breweries Co on November 27, 2024 and sell it today you would earn a total of 100.00 from holding United Breweries Co or generate 9.01% 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. United Breweries Co
Performance |
| Timeline |
| Cogent Communications |
| United Breweries |
Cogent Communications and United Breweries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and United Breweries
The main advantage of trading using opposite Cogent Communications and United Breweries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, United Breweries 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 United Breweries will offset losses from the drop in United Breweries' long position.| Cogent Communications vs. PARKEN Sport Entertainment | Cogent Communications vs. Universal Entertainment | Cogent Communications vs. CNVISION MEDIA | Cogent Communications vs. SQUIRREL MEDIA SA |
| United Breweries vs. CORNISH METALS INC | United Breweries vs. ADRIATIC METALS LS 013355 | United Breweries vs. Perseus Mining Limited | United Breweries vs. Tower One Wireless |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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