Correlation Between Cogna Educao and Melco Resorts

Can any of the company-specific risk be diversified away by investing in both Cogna Educao and Melco Resorts 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 Cogna Educao and Melco Resorts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cogna Educao SA and Melco Resorts Entertainment, you can compare the effects of market volatilities on Cogna Educao and Melco Resorts 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 Cogna Educao with a short position of Melco Resorts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cogna Educao and Melco Resorts.

Diversification Opportunities for Cogna Educao and Melco Resorts

0.35

Correlation Coefficient

Cogna Educao  Melco Resorts

Weak diversification

The 3 months correlation between Cogna and Melco is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cogna Educao SA and Melco Resorts Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Melco Resorts Entert and Cogna Educao 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 Cogna Educao SA are associated (or correlated) with Melco Resorts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Melco Resorts Entert has no effect on the direction of Cogna Educao i.e., Cogna Educao and Melco Resorts go up and down completely randomly.

Pair Corralation between Cogna Educao and Melco Resorts

Assuming the 90 days trading horizon Cogna Educao SA is expected to generate 1.02 times more return on investment than Melco Resorts. However, Cogna Educao is 1.02 times more volatile than Melco Resorts Entertainment. It trades about 0.0 of its potential returns per unit of risk. Melco Resorts Entertainment is currently generating about -0.01 per unit of risk. If you would invest  327.00  in Cogna Educao SA on April 24, 2025 and sell it today you would lose (70.00) from holding Cogna Educao SA or give up 21.41% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.8%
Values	Daily Returns

Cogna Educao SA  vs.  Melco Resorts Entertainment

Cogna Educao SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Cogna Educao SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Cogna Educao may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Melco Resorts Entert

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Melco Resorts Entertainment are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak essential indicators, Melco Resorts sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cogna Educao and Melco Resorts

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

The idea behind Cogna Educao SA and Melco Resorts Entertainment 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.