Correlation Between Cogent Communications and Peak Minerals

Can any of the company-specific risk be diversified away by investing in both Cogent Communications and Peak Minerals 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 Peak Minerals 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 Peak Minerals Limited, you can compare the effects of market volatilities on Cogent Communications and Peak Minerals 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 Peak Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogent Communications and Peak Minerals.

Diversification Opportunities for Cogent Communications and Peak Minerals

0.0

Correlation Coefficient

Cogent Communications  Peak Minerals

Pay attention - limited upside

The 3 months correlation between Cogent and Peak is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Peak Minerals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peak Minerals Limited 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 Peak Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peak Minerals Limited has no effect on the direction of Cogent Communications i.e., Cogent Communications and Peak Minerals go up and down completely randomly.

Pair Corralation between Cogent Communications and Peak Minerals

If you would invest  5,787  in Cogent Communications Holdings on October 10, 2024 and sell it today you would earn a total of  1,563  from holding Cogent Communications Holdings or generate 27.01% return on investment over 90 days.

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

Cogent Communications Holdings  vs.  Peak Minerals Limited

Cogent Communications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 2 (%) 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.

Peak Minerals Limited

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cogent Communications and Peak Minerals

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

The idea behind Cogent Communications Holdings and Peak Minerals Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.