Correlation Between East Side and Cogeco Communications

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

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

Diversification Opportunities for East Side and Cogeco Communications

-0.3

Correlation Coefficient

East Side  Cogeco Communications

Very good diversification

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

Pair Corralation between East Side and Cogeco Communications

Assuming the 90 days trading horizon East Side Games is expected to generate 3.26 times more return on investment than Cogeco Communications. However, East Side is 3.26 times more volatile than Cogeco Communications. It trades about 0.01 of its potential returns per unit of risk. Cogeco Communications is currently generating about 0.02 per unit of risk. If you would invest  84.00  in East Side Games on September 4, 2024 and sell it today you would lose (22.00) from holding East Side Games or give up 26.19% of portfolio value over 90 days.

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

East Side Games  vs.  Cogeco Communications

East Side Games

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days East Side Games has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Cogeco Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Cogeco Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with East Side and Cogeco Communications

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

The idea behind East Side Games and Cogeco Communications 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.