Correlation Between Transportadora and Cogent Communications
Can any of the company-specific risk be diversified away by investing in both Transportadora 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 Transportadora and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transportadora de Gas and Cogent Communications Holdings, you can compare the effects of market volatilities on Transportadora 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 Transportadora with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transportadora and Cogent Communications.
Diversification Opportunities for Transportadora and Cogent Communications
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Transportadora and Cogent is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Transportadora de Gas and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Transportadora 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 Transportadora de Gas 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 Transportadora i.e., Transportadora and Cogent Communications go up and down completely randomly.
Pair Corralation between Transportadora and Cogent Communications
Assuming the 90 days trading horizon Transportadora de Gas is expected to generate 1.64 times more return on investment than Cogent Communications. However, Transportadora is 1.64 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 0.14 per unit of risk. If you would invest 1,770 in Transportadora de Gas on September 1, 2024 and sell it today you would earn a total of 1,090 from holding Transportadora de Gas or generate 61.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transportadora de Gas vs. Cogent Communications Holdings
Performance |
| Timeline |
| Transportadora de Gas |
| Cogent Communications |
Transportadora and Cogent Communications Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transportadora and Cogent Communications
The main advantage of trading using opposite Transportadora and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transportadora 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.| Transportadora vs. AIR PRODCHEMICALS | Transportadora vs. Bumrungrad Hospital Public | Transportadora vs. National Health Investors | Transportadora vs. Cardinal Health |
| Cogent Communications vs. Perma Fix Environmental Services | Cogent Communications vs. Nippon Steel | Cogent Communications vs. Insteel Industries | Cogent Communications vs. Caltagirone SpA |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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