Correlation Between Cogent Communications and JD SPORTS

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

Diversification Opportunities for Cogent Communications and JD SPORTS

-0.15

Correlation Coefficient

Cogent Communications  JD SPORTS

Good diversification

The 3 months correlation between Cogent and 9JD is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and JD SPORTS FASH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD SPORTS FASH 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 JD SPORTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD SPORTS FASH has no effect on the direction of Cogent Communications i.e., Cogent Communications and JD SPORTS go up and down completely randomly.

Pair Corralation between Cogent Communications and JD SPORTS

Assuming the 90 days trading horizon Cogent Communications is expected to generate 2.96 times less return on investment than JD SPORTS. But when comparing it to its historical volatility, Cogent Communications Holdings is 1.08 times less risky than JD SPORTS. It trades about 0.02 of its potential returns per unit of risk. JD SPORTS FASH is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  89.00  in JD SPORTS FASH on April 23, 2025 and sell it today you would earn a total of  7.00  from holding JD SPORTS FASH or generate 7.87% return on investment over 90 days.

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

Cogent Communications Holdings  vs.  JD SPORTS FASH

Cogent Communications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cogent Communications Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable primary indicators, Cogent Communications is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

JD SPORTS FASH

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in JD SPORTS FASH are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, JD SPORTS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Cogent Communications and JD SPORTS

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

The idea behind Cogent Communications Holdings and JD SPORTS FASH 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.