Correlation Between TuanChe ADR and Cogent Communications

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

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

Diversification Opportunities for TuanChe ADR and Cogent Communications

0.39

Correlation Coefficient

TuanChe ADR  Cogent Communications

Weak diversification

The 3 months correlation between TuanChe and Cogent is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding TuanChe ADR and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and TuanChe ADR 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 TuanChe ADR 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 TuanChe ADR i.e., TuanChe ADR and Cogent Communications go up and down completely randomly.

Pair Corralation between TuanChe ADR and Cogent Communications

Allowing for the 90-day total investment horizon TuanChe ADR is expected to under-perform the Cogent Communications. In addition to that, TuanChe ADR is 2.29 times more volatile than Cogent Communications Group. It trades about -0.13 of its total potential returns per unit of risk. Cogent Communications Group is currently generating about -0.14 per unit of volatility. If you would invest  7,483  in Cogent Communications Group on December 28, 2024 and sell it today you would lose (1,326) from holding Cogent Communications Group or give up 17.72% of portfolio value over 90 days.

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

TuanChe ADR  vs.  Cogent Communications Group

TuanChe ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days TuanChe ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with TuanChe ADR and Cogent Communications

The main advantage of trading using opposite TuanChe ADR and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TuanChe ADR 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 TuanChe ADR and Cogent Communications Group 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.