Correlation Between PRECISION DRILLING and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both PRECISION DRILLING and Cogent Communications 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 PRECISION DRILLING and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PRECISION DRILLING P and Cogent Communications Holdings, you can compare the effects of market volatilities on PRECISION DRILLING and Cogent Communications 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 PRECISION DRILLING with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of PRECISION DRILLING and Cogent Communications.
Diversification Opportunities for PRECISION DRILLING and Cogent Communications
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between PRECISION and Cogent is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PRECISION DRILLING P and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and PRECISION DRILLING 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 PRECISION DRILLING P are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of PRECISION DRILLING i.e., PRECISION DRILLING and Cogent Communications go up and down completely randomly.
Pair Corralation between PRECISION DRILLING and Cogent Communications
Assuming the 90 days trading horizon PRECISION DRILLING P is expected to generate 1.47 times more return on investment than Cogent Communications. However, PRECISION DRILLING is 1.47 times more volatile than Cogent Communications Holdings. It trades about 0.25 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.14 per unit of risk. If you would invest 5,700 in PRECISION DRILLING P on October 17, 2024 and sell it today you would earn a total of 600.00 from holding PRECISION DRILLING P or generate 10.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PRECISION DRILLING P vs. Cogent Communications Holdings
Performance |
| Timeline |
| PRECISION DRILLING |
| Cogent Communications |
PRECISION DRILLING and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PRECISION DRILLING and Cogent Communications
The main advantage of trading using opposite PRECISION DRILLING and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PRECISION DRILLING position performs unexpectedly, Cogent Communications 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 Cogent Communications will offset losses from the drop in Cogent Communications' long position.| PRECISION DRILLING vs. Plastic Omnium | PRECISION DRILLING vs. Rayonier Advanced Materials | PRECISION DRILLING vs. Nippon Light Metal | PRECISION DRILLING vs. DAIDO METAL TD |
| Cogent Communications vs. CANON MARKETING JP | Cogent Communications vs. Strategic Education | Cogent Communications vs. IDP EDUCATION LTD | Cogent Communications vs. G8 EDUCATION |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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