Correlation Between Schloss Wachenheim and Cogent Communications

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

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

Diversification Opportunities for Schloss Wachenheim and Cogent Communications

-0.29

Correlation Coefficient

Schloss Wachenheim  Cogent Communications

Very good diversification

The 3 months correlation between Schloss and Cogent is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Schloss Wachenheim AG and Cogent Communications Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and Schloss Wachenheim 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 Schloss Wachenheim AG 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 Schloss Wachenheim i.e., Schloss Wachenheim and Cogent Communications go up and down completely randomly.

Pair Corralation between Schloss Wachenheim and Cogent Communications

Assuming the 90 days trading horizon Schloss Wachenheim AG is expected to generate 0.9 times more return on investment than Cogent Communications. However, Schloss Wachenheim AG is 1.11 times less risky than Cogent Communications. It trades about 0.03 of its potential returns per unit of risk. Cogent Communications Holdings is currently generating about -0.03 per unit of risk. If you would invest  1,438  in Schloss Wachenheim AG on September 15, 2024 and sell it today you would earn a total of  12.00  from holding Schloss Wachenheim AG or generate 0.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Schloss Wachenheim AG  vs.  Cogent Communications Holdings

Schloss Wachenheim

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Schloss Wachenheim AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Schloss Wachenheim is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Cogent Communications

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile primary indicators, Cogent Communications reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Schloss Wachenheim and Cogent Communications

The main advantage of trading using opposite Schloss Wachenheim and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Schloss Wachenheim 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 Schloss Wachenheim AG 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.