Correlation Between Cogent Communications and ALERION CLEANPOWER
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and ALERION CLEANPOWER 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 ALERION CLEANPOWER 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 ALERION CLEANPOWER, you can compare the effects of market volatilities on Cogent Communications and ALERION CLEANPOWER 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 ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and ALERION CLEANPOWER.
Diversification Opportunities for Cogent Communications and ALERION CLEANPOWER
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cogent and ALERION is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER 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 ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of Cogent Communications i.e., Cogent Communications and ALERION CLEANPOWER go up and down completely randomly.
Pair Corralation between Cogent Communications and ALERION CLEANPOWER
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the ALERION CLEANPOWER. But the stock apears to be less risky and, when comparing its historical volatility, Cogent Communications Holdings is 1.9 times less risky than ALERION CLEANPOWER. The stock trades about -0.12 of its potential returns per unit of risk. The ALERION CLEANPOWER is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,472 in ALERION CLEANPOWER on September 12, 2024 and sell it today you would earn a total of 292.00 from holding ALERION CLEANPOWER or generate 19.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. ALERION CLEANPOWER
Performance |
| Timeline |
| Cogent Communications |
| ALERION CLEANPOWER |
Cogent Communications and ALERION CLEANPOWER Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and ALERION CLEANPOWER
The main advantage of trading using opposite Cogent Communications and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, ALERION CLEANPOWER 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 ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's 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 |
| ALERION CLEANPOWER vs. USWE SPORTS AB | ALERION CLEANPOWER vs. ARISTOCRAT LEISURE | ALERION CLEANPOWER vs. RCM TECHNOLOGIES | ALERION CLEANPOWER vs. ACCSYS TECHPLC EO |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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