Correlation Between INDO-RAMA SYNTHETIC and Cogent Communications

Can any of the company-specific risk be diversified away by investing in both INDO-RAMA SYNTHETIC 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 INDO-RAMA SYNTHETIC and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between INDO RAMA SYNTHETIC and Cogent Communications Holdings, you can compare the effects of market volatilities on INDO-RAMA SYNTHETIC 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 INDO-RAMA SYNTHETIC with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of INDO-RAMA SYNTHETIC and Cogent Communications.

Diversification Opportunities for INDO-RAMA SYNTHETIC and Cogent Communications

0.0

Correlation Coefficient

INDO-RAMA SYNTHETIC  Cogent Communications

Pay attention - limited upside

The 3 months correlation between INDO-RAMA and Cogent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding INDO RAMA SYNTHETIC and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and INDO-RAMA SYNTHETIC 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 INDO RAMA SYNTHETIC 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 INDO-RAMA SYNTHETIC i.e., INDO-RAMA SYNTHETIC and Cogent Communications go up and down completely randomly.

Pair Corralation between INDO-RAMA SYNTHETIC and Cogent Communications

Assuming the 90 days trading horizon INDO-RAMA SYNTHETIC is expected to generate 31.79 times less return on investment than Cogent Communications. But when comparing it to its historical volatility, INDO RAMA SYNTHETIC is 2.89 times less risky than Cogent Communications. It trades about 0.0 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  5,828  in Cogent Communications Holdings on December 4, 2024 and sell it today you would earn a total of  1,072  from holding Cogent Communications Holdings or generate 18.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

INDO RAMA SYNTHETIC  vs.  Cogent Communications Holdings

INDO RAMA SYNTHETIC

Risk-Adjusted Performance

Very Weak

Over the last 90 days INDO RAMA SYNTHETIC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, INDO-RAMA SYNTHETIC is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with INDO-RAMA SYNTHETIC and Cogent Communications

The main advantage of trading using opposite INDO-RAMA SYNTHETIC and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if INDO-RAMA SYNTHETIC 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.

The idea behind INDO RAMA SYNTHETIC and Cogent Communications Holdings pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.