Correlation Between Cogent Communications and Tokyo Gas

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

Diversification Opportunities for Cogent Communications and Tokyo Gas

0.0

Correlation Coefficient

Cogent Communications  Tokyo Gas

Pay attention - limited upside

The 3 months correlation between Cogent and Tokyo is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and Tokyo Gas CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tokyo Gas CoLtd 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 Tokyo Gas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tokyo Gas CoLtd has no effect on the direction of Cogent Communications i.e., Cogent Communications and Tokyo Gas go up and down completely randomly.

Pair Corralation between Cogent Communications and Tokyo Gas

If you would invest  6,616  in Cogent Communications Holdings on October 1, 2024 and sell it today you would earn a total of  584.00  from holding Cogent Communications Holdings or generate 8.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Cogent Communications Holdings  vs.  Tokyo Gas CoLtd

Cogent Communications

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak primary indicators, Cogent Communications may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Tokyo Gas CoLtd

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tokyo Gas CoLtd are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Tokyo Gas reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogent Communications and Tokyo Gas

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

The idea behind Cogent Communications Holdings and Tokyo Gas CoLtd 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.