Correlation Between Cogstate and CardioComm Solutions

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

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

Diversification Opportunities for Cogstate and CardioComm Solutions

0.21

Correlation Coefficient

Cogstate  CardioComm Solutions

Modest diversification

The 3 months correlation between Cogstate and CardioComm is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cogstate Limited and CardioComm Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CardioComm Solutions and Cogstate 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 Cogstate Limited are associated (or correlated) with CardioComm Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CardioComm Solutions has no effect on the direction of Cogstate i.e., Cogstate and CardioComm Solutions go up and down completely randomly.

Pair Corralation between Cogstate and CardioComm Solutions

Assuming the 90 days horizon Cogstate is expected to generate 2.24 times less return on investment than CardioComm Solutions. But when comparing it to its historical volatility, Cogstate Limited is 1.14 times less risky than CardioComm Solutions. It trades about 0.08 of its potential returns per unit of risk. CardioComm Solutions is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  1.04  in CardioComm Solutions on September 12, 2024 and sell it today you would earn a total of  0.26  from holding CardioComm Solutions or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Cogstate Limited  vs.  CardioComm Solutions

Cogstate Limited

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogstate Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly abnormal basic indicators, Cogstate may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CardioComm Solutions

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CardioComm Solutions are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting technical and fundamental indicators, CardioComm Solutions reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogstate and CardioComm Solutions

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

The idea behind Cogstate Limited and CardioComm Solutions 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.