Correlation Between Cogent Communications and Plastic Omnium
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Plastic Omnium 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 Plastic Omnium 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 Plastic Omnium, you can compare the effects of market volatilities on Cogent Communications and Plastic Omnium 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 Plastic Omnium. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Plastic Omnium.
Diversification Opportunities for Cogent Communications and Plastic Omnium
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cogent and Plastic is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Plastic Omnium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plastic Omnium 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 Plastic Omnium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plastic Omnium has no effect on the direction of Cogent Communications i.e., Cogent Communications and Plastic Omnium go up and down completely randomly.
Pair Corralation between Cogent Communications and Plastic Omnium
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.91 times more return on investment than Plastic Omnium. However, Cogent Communications Holdings is 1.1 times less risky than Plastic Omnium. It trades about 0.06 of its potential returns per unit of risk. Plastic Omnium is currently generating about -0.04 per unit of risk. If you would invest 6,016 in Cogent Communications Holdings on September 3, 2024 and sell it today you would earn a total of 1,684 from holding Cogent Communications Holdings or generate 27.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Plastic Omnium
Performance |
| Timeline |
| Cogent Communications |
| Plastic Omnium |
Cogent Communications and Plastic Omnium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Plastic Omnium
The main advantage of trading using opposite Cogent Communications and Plastic Omnium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Plastic Omnium 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 Plastic Omnium will offset losses from the drop in Plastic Omnium's long position.| Cogent Communications vs. T Mobile | Cogent Communications vs. China Mobile Limited | Cogent Communications vs. ATT Inc | Cogent Communications vs. Nippon Telegraph and |
| Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc | Plastic Omnium vs. Apple Inc |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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