Correlation Between XXIX Metal and Cogeco Communications

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

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

Diversification Opportunities for XXIX Metal and Cogeco Communications

0.27

Correlation Coefficient

XXIX Metal  Cogeco Communications

Modest diversification

The 3 months correlation between XXIX and Cogeco is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding XXIX Metal Corp and Cogeco Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogeco Communications and XXIX Metal 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 XXIX Metal Corp 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 XXIX Metal i.e., XXIX Metal and Cogeco Communications go up and down completely randomly.

Pair Corralation between XXIX Metal and Cogeco Communications

Assuming the 90 days trading horizon XXIX Metal Corp is expected to generate 2.44 times more return on investment than Cogeco Communications. However, XXIX Metal is 2.44 times more volatile than Cogeco Communications. It trades about 0.02 of its potential returns per unit of risk. Cogeco Communications is currently generating about -0.13 per unit of risk. If you would invest  12.00  in XXIX Metal Corp on October 21, 2024 and sell it today you would earn a total of  0.00  from holding XXIX Metal Corp or generate 0.0% return on investment over 90 days.

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

XXIX Metal Corp  vs.  Cogeco Communications

XXIX Metal Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in XXIX Metal Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable forward indicators, XXIX Metal is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Cogeco Communications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cogeco Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with XXIX Metal and Cogeco Communications

The main advantage of trading using opposite XXIX Metal and Cogeco Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if XXIX Metal 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 XXIX Metal Corp 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.