Correlation Between Cogent Communications and COUSINS PTIES

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

By analyzing existing cross correlation between Cogent Communications Holdings and COUSINS PTIES INC, you can compare the effects of market volatilities on Cogent Communications and COUSINS PTIES 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 COUSINS PTIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and COUSINS PTIES.

Diversification Opportunities for Cogent Communications and COUSINS PTIES

0.81

Correlation Coefficient

Cogent Communications  COUSINS PTIES

Very poor diversification

The 3 months correlation between Cogent and COUSINS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and COUSINS PTIES INC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on COUSINS PTIES INC 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 Holdings are associated (or correlated) with COUSINS PTIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of COUSINS PTIES INC has no effect on the direction of Cogent Communications i.e., Cogent Communications and COUSINS PTIES go up and down completely randomly.

Pair Corralation between Cogent Communications and COUSINS PTIES

Assuming the 90 days trading horizon Cogent Communications is expected to generate 6.3 times less return on investment than COUSINS PTIES. In addition to that, Cogent Communications is 1.27 times more volatile than COUSINS PTIES INC. It trades about 0.01 of its total potential returns per unit of risk. COUSINS PTIES INC is currently generating about 0.12 per unit of volatility. If you would invest  2,632  in COUSINS PTIES INC on October 9, 2024 and sell it today you would earn a total of  268.00  from holding COUSINS PTIES INC or generate 10.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.33%
Values	Daily Returns

Cogent Communications Holdings  vs.  COUSINS PTIES INC

Cogent Communications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Cogent Communications is not utilizing all of its potentials. The latest stock price disturbance, may contribute to mid-run losses for the stockholders.

COUSINS PTIES INC

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in COUSINS PTIES INC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, COUSINS PTIES may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cogent Communications and COUSINS PTIES

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

The idea behind Cogent Communications Holdings and COUSINS PTIES INC 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.