Correlation Between Cogeco Communications and QUALCOMM Incorporated

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

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

Diversification Opportunities for Cogeco Communications and QUALCOMM Incorporated

0.68

Correlation Coefficient

Cogeco Communications  QUALCOMM Incorporated

Poor diversification

The 3 months correlation between Cogeco and QUALCOMM is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Cogeco Communications and QUALCOMM Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on QUALCOMM Incorporated and Cogeco 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 Cogeco Communications are associated (or correlated) with QUALCOMM Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of QUALCOMM Incorporated has no effect on the direction of Cogeco Communications i.e., Cogeco Communications and QUALCOMM Incorporated go up and down completely randomly.

Pair Corralation between Cogeco Communications and QUALCOMM Incorporated

Assuming the 90 days trading horizon Cogeco Communications is expected to generate 15.67 times less return on investment than QUALCOMM Incorporated. But when comparing it to its historical volatility, Cogeco Communications is 1.29 times less risky than QUALCOMM Incorporated. It trades about 0.01 of its potential returns per unit of risk. QUALCOMM Incorporated is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  1,809  in QUALCOMM Incorporated on April 21, 2025 and sell it today you would earn a total of  253.00  from holding QUALCOMM Incorporated or generate 13.99% return on investment over 90 days.

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

Cogeco Communications  vs.  QUALCOMM Incorporated

Cogeco Communications

Risk-Adjusted Performance

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 very healthy basic indicators, Cogeco Communications is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

QUALCOMM Incorporated

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in QUALCOMM Incorporated are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather abnormal technical and fundamental indicators, QUALCOMM Incorporated exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogeco Communications and QUALCOMM Incorporated

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

The idea behind Cogeco Communications and QUALCOMM Incorporated 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.