Correlation Between Sekisui Chemical and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Sekisui Chemical 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 Sekisui Chemical and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sekisui Chemical Co and Cogent Communications Holdings, you can compare the effects of market volatilities on Sekisui Chemical 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 Sekisui Chemical with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sekisui Chemical and Cogent Communications.
Diversification Opportunities for Sekisui Chemical and Cogent Communications
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sekisui and Cogent is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sekisui Chemical Co and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Sekisui Chemical 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 Sekisui Chemical Co 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 Sekisui Chemical i.e., Sekisui Chemical and Cogent Communications go up and down completely randomly.
Pair Corralation between Sekisui Chemical and Cogent Communications
Assuming the 90 days horizon Sekisui Chemical Co is expected to generate 1.15 times more return on investment than Cogent Communications. However, Sekisui Chemical is 1.15 times more volatile than Cogent Communications Holdings. It trades about 0.11 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.12 per unit of risk. If you would invest 1,410 in Sekisui Chemical Co on September 12, 2024 and sell it today you would earn a total of 70.00 from holding Sekisui Chemical Co or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sekisui Chemical Co vs. Cogent Communications Holdings
Performance |
| Timeline |
| Sekisui Chemical |
| Cogent Communications |
Sekisui Chemical and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sekisui Chemical and Cogent Communications
The main advantage of trading using opposite Sekisui Chemical and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sekisui Chemical 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.| Sekisui Chemical vs. Lennar | Sekisui Chemical vs. Superior Plus Corp | Sekisui Chemical vs. SIVERS SEMICONDUCTORS AB | Sekisui Chemical vs. NorAm Drilling AS |
| Cogent Communications vs. Superior Plus Corp | Cogent Communications vs. SIVERS SEMICONDUCTORS AB | Cogent Communications vs. Norsk Hydro ASA | Cogent Communications 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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