Correlation Between KORE Group and Cogent Communications

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

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

Diversification Opportunities for KORE Group and Cogent Communications

0.22

Correlation Coefficient

KORE Group  Cogent Communications

Modest diversification

The 3 months correlation between KORE and Cogent is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding KORE Group Holdings and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and KORE Group 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 KORE Group Holdings 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 KORE Group i.e., KORE Group and Cogent Communications go up and down completely randomly.

Pair Corralation between KORE Group and Cogent Communications

Given the investment horizon of 90 days KORE Group is expected to generate 1.39 times less return on investment than Cogent Communications. In addition to that, KORE Group is 3.84 times more volatile than Cogent Communications Group. It trades about 0.04 of its total potential returns per unit of risk. Cogent Communications Group is currently generating about 0.21 per unit of volatility. If you would invest  7,423  in Cogent Communications Group on November 28, 2024 and sell it today you would earn a total of  499.00  from holding Cogent Communications Group or generate 6.72% return on investment over 90 days.

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

KORE Group Holdings  vs.  Cogent Communications Group

KORE Group Holdings

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in KORE Group Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting basic indicators, KORE Group exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 fairly strong basic indicators, Cogent Communications is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with KORE Group and Cogent Communications

The main advantage of trading using opposite KORE Group and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KORE Group 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 KORE Group Holdings 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.