Correlation Between Cogent Communications and Ping An

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

Diversification Opportunities for Cogent Communications and Ping An

-0.19

Correlation Coefficient

Cogent Communications  Ping An

Good diversification

The 3 months correlation between Cogent and Ping is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Ping An Insurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ping An Insurance 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 Ping An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ping An Insurance has no effect on the direction of Cogent Communications i.e., Cogent Communications and Ping An go up and down completely randomly.

Pair Corralation between Cogent Communications and Ping An

Assuming the 90 days trading horizon Cogent Communications is expected to generate 3.18 times less return on investment than Ping An. But when comparing it to its historical volatility, Cogent Communications Holdings is 1.86 times less risky than Ping An. It trades about 0.04 of its potential returns per unit of risk. Ping An Insurance is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Ping An Insurance on October 4, 2024 and sell it today you would earn a total of  288.00  from holding Ping An Insurance or generate 102.86% return on investment over 90 days.

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

Cogent Communications Holdings  vs.  Ping An Insurance

Cogent Communications

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Cogent Communications may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ping An Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ping An Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Cogent Communications and Ping An

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

The idea behind Cogent Communications Holdings and Ping An Insurance 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.