Correlation Between Cogent Communications and United Internet
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and United Internet 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 United Internet 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 United Internet AG, you can compare the effects of market volatilities on Cogent Communications and United Internet 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 United Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and United Internet.
Diversification Opportunities for Cogent Communications and United Internet
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cogent and United is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and United Internet AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Internet AG 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 United Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Internet AG has no effect on the direction of Cogent Communications i.e., Cogent Communications and United Internet go up and down completely randomly.
Pair Corralation between Cogent Communications and United Internet
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 0.87 times more return on investment than United Internet. However, Cogent Communications Holdings is 1.15 times less risky than United Internet. It trades about 0.13 of its potential returns per unit of risk. United Internet AG is currently generating about -0.09 per unit of risk. If you would invest 6,172 in Cogent Communications Holdings on September 12, 2024 and sell it today you would earn a total of 1,028 from holding Cogent Communications Holdings or generate 16.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cogent Communications Holdings vs. United Internet AG
Performance |
| Timeline |
| Cogent Communications |
| United Internet AG |
Cogent Communications and United Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and United Internet
The main advantage of trading using opposite Cogent Communications and United Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, United Internet 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 United Internet will offset losses from the drop in United Internet'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 |
| United Internet vs. Superior Plus Corp | United Internet vs. SIVERS SEMICONDUCTORS AB | United Internet vs. Norsk Hydro ASA | United Internet vs. Reliance Steel Aluminum |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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