Correlation Between Cogent Communications and STELMINE CANADA
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and STELMINE CANADA 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 STELMINE CANADA 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 STELMINE CANADA LTD, you can compare the effects of market volatilities on Cogent Communications and STELMINE CANADA 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 STELMINE CANADA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and STELMINE CANADA.
Diversification Opportunities for Cogent Communications and STELMINE CANADA
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cogent and STELMINE is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and STELMINE CANADA LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STELMINE CANADA LTD 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 STELMINE CANADA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STELMINE CANADA LTD has no effect on the direction of Cogent Communications i.e., Cogent Communications and STELMINE CANADA go up and down completely randomly.
Pair Corralation between Cogent Communications and STELMINE CANADA
Assuming the 90 days trading horizon Cogent Communications is expected to generate 298.76 times less return on investment than STELMINE CANADA. But when comparing it to its historical volatility, Cogent Communications Holdings is 152.79 times less risky than STELMINE CANADA. It trades about 0.2 of its potential returns per unit of risk. STELMINE CANADA LTD is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 0.55 in STELMINE CANADA LTD on August 31, 2024 and sell it today you would earn a total of 0.45 from holding STELMINE CANADA LTD or generate 81.82% 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. STELMINE CANADA LTD
Performance |
| Timeline |
| Cogent Communications |
| STELMINE CANADA LTD |
Cogent Communications and STELMINE CANADA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and STELMINE CANADA
The main advantage of trading using opposite Cogent Communications and STELMINE CANADA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, STELMINE CANADA 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 STELMINE CANADA will offset losses from the drop in STELMINE CANADA's long position.| Cogent Communications vs. T Mobile | Cogent Communications vs. ATT Inc | Cogent Communications vs. Deutsche Telekom AG | Cogent Communications vs. Superior Plus Corp |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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