Correlation Between Cogeco Communications and Foran Mining

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

By analyzing existing cross correlation between Cogeco Communications and Foran Mining, you can compare the effects of market volatilities on Cogeco Communications and Foran Mining 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 Cogeco Communications with a short position of Foran Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogeco Communications and Foran Mining.

Diversification Opportunities for Cogeco Communications and Foran Mining

0.3

Correlation Coefficient

Cogeco Communications  Foran Mining

Weak diversification

The 3 months correlation between Cogeco and Foran is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and Foran Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foran Mining and Cogeco Communications 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 Cogeco Communications are associated (or correlated) with Foran Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foran Mining has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and Foran Mining go up and down completely randomly.

Pair Corralation between Cogeco Communications and Foran Mining

Assuming the 90 days trading horizon Cogeco Communications is expected to generate 3.13 times less return on investment than Foran Mining. But when comparing it to its historical volatility, Cogeco Communications is 1.62 times less risky than Foran Mining. It trades about 0.02 of its potential returns per unit of risk. Foran Mining is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  322.00  in Foran Mining on October 1, 2024 and sell it today you would earn a total of  76.00  from holding Foran Mining or generate 23.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cogeco Communications  vs.  Foran Mining

Cogeco Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogeco Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Foran Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Foran Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Foran Mining is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Cogeco Communications and Foran Mining

The main advantage of trading using opposite Cogeco Communications and Foran Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cogeco Communications position performs unexpectedly, Foran Mining 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 Foran Mining will offset losses from the drop in Foran Mining's long position.

The idea behind Cogeco Communications and Foran Mining 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.

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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.