Correlation Between Xinhua Winshare and Cogent Communications

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

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

Diversification Opportunities for Xinhua Winshare and Cogent Communications

0.31

Correlation Coefficient

Xinhua Winshare  Cogent Communications

Weak diversification

The 3 months correlation between Xinhua and Cogent is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Xinhua Winshare Publishing and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Xinhua Winshare 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 Xinhua Winshare Publishing are associated (or correlated) with Cogent Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cogent Communications has no effect on the direction of Xinhua Winshare i.e., Xinhua Winshare and Cogent Communications go up and down completely randomly.

Pair Corralation between Xinhua Winshare and Cogent Communications

Assuming the 90 days horizon Xinhua Winshare Publishing is expected to generate 0.98 times more return on investment than Cogent Communications. However, Xinhua Winshare Publishing is 1.02 times less risky than Cogent Communications. It trades about 0.65 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.3 per unit of risk. If you would invest  119.00  in Xinhua Winshare Publishing on October 3, 2024 and sell it today you would earn a total of  25.00  from holding Xinhua Winshare Publishing or generate 21.01% return on investment over 90 days.

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

Xinhua Winshare Publishing  vs.  Cogent Communications Holdings

Xinhua Winshare Publ

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Xinhua Winshare Publishing are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Xinhua Winshare reported solid returns over the last few months and may actually be approaching a breakup point.

Cogent Communications

Risk-Adjusted Performance

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 4 (%) 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.

Pair Trading with Xinhua Winshare and Cogent Communications

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

The idea behind Xinhua Winshare Publishing and Cogent Communications Holdings 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.