Correlation Between Cogent Communications and SK TELECOM
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and SK TELECOM 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 SK TELECOM 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 SK TELECOM TDADR, you can compare the effects of market volatilities on Cogent Communications and SK TELECOM 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 SK TELECOM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and SK TELECOM.
Diversification Opportunities for Cogent Communications and SK TELECOM
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogent and KMBA is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and SK TELECOM TDADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SK TELECOM TDADR 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 SK TELECOM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SK TELECOM TDADR has no effect on the direction of Cogent Communications i.e., Cogent Communications and SK TELECOM go up and down completely randomly.
Pair Corralation between Cogent Communications and SK TELECOM
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.75 times more return on investment than SK TELECOM. However, Cogent Communications Holdings is 1.33 times less risky than SK TELECOM. It trades about 0.14 of its potential returns per unit of risk. SK TELECOM TDADR is currently generating about 0.07 per unit of risk. If you would invest 7,406 in Cogent Communications Holdings on August 27, 2024 and sell it today you would earn a total of 494.00 from holding Cogent Communications Holdings or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Cogent Communications Holdings vs. SK TELECOM TDADR
Performance |
| Timeline |
| Cogent Communications |
| SK TELECOM TDADR |
Cogent Communications and SK TELECOM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and SK TELECOM
The main advantage of trading using opposite Cogent Communications and SK TELECOM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, SK TELECOM 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 SK TELECOM will offset losses from the drop in SK TELECOM's long position.| Cogent Communications vs. T Mobile | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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