Correlation Between Cogent Communications and Renesas Electronics
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Renesas Electronics 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 Renesas Electronics 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 Renesas Electronics, you can compare the effects of market volatilities on Cogent Communications and Renesas Electronics 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 Renesas Electronics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Renesas Electronics.
Diversification Opportunities for Cogent Communications and Renesas Electronics
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cogent and Renesas is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Renesas Electronics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renesas Electronics 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 Renesas Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renesas Electronics has no effect on the direction of Cogent Communications i.e., Cogent Communications and Renesas Electronics go up and down completely randomly.
Pair Corralation between Cogent Communications and Renesas Electronics
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.7 times more return on investment than Renesas Electronics. However, Cogent Communications Holdings is 1.42 times less risky than Renesas Electronics. It trades about 0.06 of its potential returns per unit of risk. Renesas Electronics is currently generating about -0.02 per unit of risk. If you would invest 5,058 in Cogent Communications Holdings on September 12, 2024 and sell it today you would earn a total of 2,142 from holding Cogent Communications Holdings or generate 42.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. Renesas Electronics
Performance |
| Timeline |
| Cogent Communications |
| Renesas Electronics |
Cogent Communications and Renesas Electronics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Renesas Electronics
The main advantage of trading using opposite Cogent Communications and Renesas Electronics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Renesas Electronics 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 Renesas Electronics will offset losses from the drop in Renesas Electronics' 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 |
| Renesas Electronics vs. Taiwan Semiconductor Manufacturing | Renesas Electronics vs. Broadcom | Renesas Electronics vs. Superior Plus Corp | Renesas Electronics vs. SIVERS SEMICONDUCTORS AB |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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