Correlation Between Cogent Communications and Sanyo Chemical
Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Sanyo Chemical 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 Sanyo Chemical 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 Sanyo Chemical Industries, you can compare the effects of market volatilities on Cogent Communications and Sanyo Chemical 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 Sanyo Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Sanyo Chemical.
Diversification Opportunities for Cogent Communications and Sanyo Chemical
-0.73 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cogent and Sanyo is -0.73. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Sanyo Chemical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sanyo Chemical Industries 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 Sanyo Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sanyo Chemical Industries has no effect on the direction of Cogent Communications i.e., Cogent Communications and Sanyo Chemical go up and down completely randomly.
Pair Corralation between Cogent Communications and Sanyo Chemical
Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the Sanyo Chemical. In addition to that, Cogent Communications is 1.63 times more volatile than Sanyo Chemical Industries. It trades about -0.12 of its total potential returns per unit of risk. Sanyo Chemical Industries is currently generating about 0.13 per unit of volatility. If you would invest 2,440 in Sanyo Chemical Industries on September 12, 2024 and sell it today you would earn a total of 80.00 from holding Sanyo Chemical Industries or generate 3.28% 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. Sanyo Chemical Industries
Performance |
| Timeline |
| Cogent Communications |
| Sanyo Chemical Industries |
Cogent Communications and Sanyo Chemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cogent Communications and Sanyo Chemical
The main advantage of trading using opposite Cogent Communications and Sanyo Chemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogent Communications position performs unexpectedly, Sanyo Chemical 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 Sanyo Chemical will offset losses from the drop in Sanyo Chemical'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 |
| Sanyo Chemical vs. Lifeway Foods | Sanyo Chemical vs. Iridium Communications | Sanyo Chemical vs. NISSIN FOODS HLDGS | Sanyo Chemical vs. Moneysupermarket Group PLC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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