Correlation Between Eros Media and Cogent Communications

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

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

Diversification Opportunities for Eros Media and Cogent Communications

0.0

Correlation Coefficient

Eros Media  Cogent Communications

Pay attention - limited upside

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

Pair Corralation between Eros Media and Cogent Communications

If you would invest (100.00) in Eros Media World on December 28, 2024 and sell it today you would earn a total of  100.00  from holding Eros Media World or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Eros Media World  vs.  Cogent Communications Group

Eros Media World

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eros Media World has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eros Media is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

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.

Pair Trading with Eros Media and Cogent Communications

The main advantage of trading using opposite Eros Media and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eros Media 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 Eros Media World and Cogent Communications Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.