Correlation Between Cogent Communications and STORE ELECTRONIC

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

Diversification Opportunities for Cogent Communications and STORE ELECTRONIC

-0.62

Correlation Coefficient

Cogent Communications  STORE ELECTRONIC

Excellent diversification

The 3 months correlation between Cogent and STORE is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and STORE ELECTRONIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STORE ELECTRONIC 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 STORE ELECTRONIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STORE ELECTRONIC has no effect on the direction of Cogent Communications i.e., Cogent Communications and STORE ELECTRONIC go up and down completely randomly.

Pair Corralation between Cogent Communications and STORE ELECTRONIC

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the STORE ELECTRONIC. But the stock apears to be less risky and, when comparing its historical volatility, Cogent Communications Holdings is 1.57 times less risky than STORE ELECTRONIC. The stock trades about -0.06 of its potential returns per unit of risk. The STORE ELECTRONIC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  16,000  in STORE ELECTRONIC on December 22, 2024 and sell it today you would earn a total of  4,040  from holding STORE ELECTRONIC or generate 25.25% return on investment over 90 days.

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

Cogent Communications Holdings  vs.  STORE ELECTRONIC

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

STORE ELECTRONIC

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in STORE ELECTRONIC are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady primary indicators, STORE ELECTRONIC exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogent Communications and STORE ELECTRONIC

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

The idea behind Cogent Communications Holdings and STORE ELECTRONIC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.