Correlation Between Cogent Communications and UmweltBank

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

Diversification Opportunities for Cogent Communications and UmweltBank

0.36

Correlation Coefficient

Cogent Communications  UmweltBank

Weak diversification

The 3 months correlation between Cogent and UmweltBank is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and UmweltBank AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UmweltBank AG 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 UmweltBank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UmweltBank AG has no effect on the direction of Cogent Communications i.e., Cogent Communications and UmweltBank go up and down completely randomly.

Pair Corralation between Cogent Communications and UmweltBank

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to generate 1.18 times more return on investment than UmweltBank. However, Cogent Communications is 1.18 times more volatile than UmweltBank AG. It trades about -0.09 of its potential returns per unit of risk. UmweltBank AG is currently generating about -0.19 per unit of risk. If you would invest  7,096  in Cogent Communications Holdings on December 24, 2024 and sell it today you would lose (846.00) from holding Cogent Communications Holdings or give up 11.92% of portfolio value over 90 days.

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

Cogent Communications Holdings  vs.  UmweltBank AG

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 fragile 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.

UmweltBank AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days UmweltBank AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Cogent Communications and UmweltBank

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

The idea behind Cogent Communications Holdings and UmweltBank AG 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.