Correlation Between RCM TECHNOLOGIES and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both RCM TECHNOLOGIES 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 RCM TECHNOLOGIES and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between RCM TECHNOLOGIES and Cogent Communications Holdings, you can compare the effects of market volatilities on RCM TECHNOLOGIES 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 RCM TECHNOLOGIES with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of RCM TECHNOLOGIES and Cogent Communications.
Diversification Opportunities for RCM TECHNOLOGIES and Cogent Communications
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between RCM and Cogent is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding RCM TECHNOLOGIES and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and RCM TECHNOLOGIES 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 RCM TECHNOLOGIES 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 RCM TECHNOLOGIES i.e., RCM TECHNOLOGIES and Cogent Communications go up and down completely randomly.
Pair Corralation between RCM TECHNOLOGIES and Cogent Communications
Assuming the 90 days trading horizon RCM TECHNOLOGIES is expected to generate 1.09 times less return on investment than Cogent Communications. In addition to that, RCM TECHNOLOGIES is 1.28 times more volatile than Cogent Communications Holdings. It trades about 0.13 of its total potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.18 per unit of volatility. If you would invest 6,172 in Cogent Communications Holdings on September 4, 2024 and sell it today you would earn a total of 1,528 from holding Cogent Communications Holdings or generate 24.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.46% |
| Values | Daily Returns |
RCM TECHNOLOGIES vs. Cogent Communications Holdings
Performance |
| Timeline |
| RCM TECHNOLOGIES |
| Cogent Communications |
RCM TECHNOLOGIES and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with RCM TECHNOLOGIES and Cogent Communications
The main advantage of trading using opposite RCM TECHNOLOGIES and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if RCM TECHNOLOGIES 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.| RCM TECHNOLOGIES vs. TOTAL GABON | RCM TECHNOLOGIES vs. Walgreens Boots Alliance | RCM TECHNOLOGIES vs. Peak Resources Limited |
| Cogent Communications vs. RCM TECHNOLOGIES | Cogent Communications vs. Ultra Clean Holdings | Cogent Communications vs. Cleanaway Waste Management | Cogent Communications vs. Amkor Technology |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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