Correlation Between Cogent Communications and KORE Group

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

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

Diversification Opportunities for Cogent Communications and KORE Group

0.05

Correlation Coefficient

Cogent Communications  KORE Group

Significant diversification

The 3 months correlation between Cogent and KORE is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Group and KORE Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KORE Group Holdings and Cogent 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 Cogent Communications Group are associated (or correlated) with KORE Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KORE Group Holdings has no effect on the direction of Cogent Communications i.e., Cogent Communications and KORE Group go up and down completely randomly.

Pair Corralation between Cogent Communications and KORE Group

Given the investment horizon of 90 days Cogent Communications Group is expected to under-perform the KORE Group. But the stock apears to be less risky and, when comparing its historical volatility, Cogent Communications Group is 2.66 times less risky than KORE Group. The stock trades about -0.14 of its potential returns per unit of risk. The KORE Group Holdings is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  272.00  in KORE Group Holdings on December 28, 2024 and sell it today you would lose (21.00) from holding KORE Group Holdings or give up 7.72% of portfolio value over 90 days.

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

Cogent Communications Group  vs.  KORE Group Holdings

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

KORE Group Holdings

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cogent Communications and KORE Group

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

The idea behind Cogent Communications Group and KORE Group 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.