Correlation Between Cogent Communications and Wilmar International

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

Diversification Opportunities for Cogent Communications and Wilmar International

-0.25

Correlation Coefficient

Cogent Communications  Wilmar International

Very good diversification

The 3 months correlation between Cogent and Wilmar is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Wilmar International Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmar International 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 Wilmar International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmar International has no effect on the direction of Cogent Communications i.e., Cogent Communications and Wilmar International go up and down completely randomly.

Pair Corralation between Cogent Communications and Wilmar International

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.2 times more return on investment than Wilmar International. However, Cogent Communications is 1.2 times more volatile than Wilmar International Limited. It trades about 0.04 of its potential returns per unit of risk. Wilmar International Limited is currently generating about 0.01 per unit of risk. If you would invest  6,298  in Cogent Communications Holdings on October 6, 2024 and sell it today you would earn a total of  1,102  from holding Cogent Communications Holdings or generate 17.5% 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.  Wilmar International Limited

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.

Wilmar International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Cogent Communications and Wilmar International

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

The idea behind Cogent Communications Holdings and Wilmar International 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 Transaction History module to view history of all your transactions and understand their impact on performance.