Correlation Between Cogent Communications and Hammerson Plc
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Hammerson Plc 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 Hammerson Plc 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 Hammerson plc, you can compare the effects of market volatilities on Cogent Communications and Hammerson Plc 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 Hammerson Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Hammerson Plc.
Diversification Opportunities for Cogent Communications and Hammerson Plc
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Cogent and Hammerson is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Hammerson plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hammerson plc 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 Hammerson Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hammerson plc has no effect on the direction of Cogent Communications i.e., Cogent Communications and Hammerson Plc go up and down completely randomly.
Pair Corralation between Cogent Communications and Hammerson Plc
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.35 times more return on investment than Hammerson Plc. However, Cogent Communications is 1.35 times more volatile than Hammerson plc. It trades about 0.14 of its potential returns per unit of risk. Hammerson plc is currently generating about 0.03 per unit of risk. If you would invest 5,252 in Cogent Communications Holdings on September 1, 2024 and sell it today you would earn a total of 2,498 from holding Cogent Communications Holdings or generate 47.56% 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. Hammerson plc
Performance |
| Timeline |
| Cogent Communications |
| Hammerson plc |
Cogent Communications and Hammerson Plc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Hammerson Plc
The main advantage of trading using opposite Cogent Communications and Hammerson Plc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Hammerson Plc 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 Hammerson Plc will offset losses from the drop in Hammerson Plc's long position.| Cogent Communications vs. Perma Fix Environmental Services | Cogent Communications vs. Nippon Steel | Cogent Communications vs. Insteel Industries | Cogent Communications vs. Caltagirone SpA |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Stocks Directory Find actively traded stocks across global markets | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |