Correlation Between Renoworks Software and Cogeco Communications

Can any of the company-specific risk be diversified away by investing in both Renoworks Software and Cogeco Communications 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 Renoworks Software and Cogeco Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Renoworks Software and Cogeco Communications, you can compare the effects of market volatilities on Renoworks Software and Cogeco Communications 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 Renoworks Software with a short position of Cogeco Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Renoworks Software and Cogeco Communications.

Diversification Opportunities for Renoworks Software and Cogeco Communications

-0.39

Correlation Coefficient

Renoworks Software  Cogeco Communications

Very good diversification

The 3 months correlation between Renoworks and Cogeco is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Renoworks Software and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and Renoworks Software 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 Renoworks Software are associated (or correlated) with Cogeco Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogeco Communications has no effect on the direction of Renoworks Software i.e., Renoworks Software and Cogeco Communications go up and down completely randomly.

Pair Corralation between Renoworks Software and Cogeco Communications

Given the investment horizon of 90 days Renoworks Software is expected to under-perform the Cogeco Communications. In addition to that, Renoworks Software is 2.21 times more volatile than Cogeco Communications. It trades about -0.06 of its total potential returns per unit of risk. Cogeco Communications is currently generating about 0.05 per unit of volatility. If you would invest  6,558  in Cogeco Communications on December 30, 2024 and sell it today you would earn a total of  282.00  from holding Cogeco Communications or generate 4.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Renoworks Software  vs.  Cogeco Communications

Renoworks Software

Risk-Adjusted Performance

Very Weak

Over the last 90 days Renoworks Software has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest abnormal performance, the Stock's basic indicators remain stable and the latest fuss on Wall Street may also be a sign of long-term gains for the venture sophisticated investors.

Cogeco Communications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogeco Communications are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Renoworks Software and Cogeco Communications

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

The idea behind Renoworks Software and Cogeco Communications 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 Global Correlations module to find global opportunities by holding instruments from different markets.