Correlation Between Cogent Communications and SmarTone Telecommunicatio

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

Diversification Opportunities for Cogent Communications and SmarTone Telecommunicatio

-0.01

Correlation Coefficient

Cogent Communications  SmarTone Telecommunicatio

Good diversification

The 3 months correlation between Cogent and SmarTone is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Cogent Communications Holdings and SmarTone Telecommunications Ho in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmarTone Telecommunicatio 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 SmarTone Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmarTone Telecommunicatio has no effect on the direction of Cogent Communications i.e., Cogent Communications and SmarTone Telecommunicatio go up and down completely randomly.

Pair Corralation between Cogent Communications and SmarTone Telecommunicatio

Assuming the 90 days trading horizon Cogent Communications Holdings is expected to under-perform the SmarTone Telecommunicatio. In addition to that, Cogent Communications is 1.97 times more volatile than SmarTone Telecommunications Holdings. It trades about -0.05 of its total potential returns per unit of risk. SmarTone Telecommunications Holdings is currently generating about 0.08 per unit of volatility. If you would invest  46.00  in SmarTone Telecommunications Holdings on April 24, 2025 and sell it today you would earn a total of  3.00  from holding SmarTone Telecommunications Holdings or generate 6.52% 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.  SmarTone Telecommunications Ho

Cogent Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cogent Communications Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

SmarTone Telecommunicatio

Risk-Adjusted Performance

Modest

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

Pair Trading with Cogent Communications and SmarTone Telecommunicatio

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

The idea behind Cogent Communications Holdings and SmarTone Telecommunications 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.