Correlation Between NOVA Technology and Cogent Communications

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Can any of the company-specific risk be diversified away by investing in both NOVA Technology 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 NOVA Technology and Cogent Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NOVA Technology and Cogent Communications Group, you can compare the effects of market volatilities on NOVA Technology 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 NOVA Technology with a short position of Cogent Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of NOVA Technology and Cogent Communications.

Diversification Opportunities for NOVA Technology and Cogent Communications

-0.22
  Correlation Coefficient

Very good diversification

The 3 months correlation between NOVA and Cogent is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding NOVA Technology and Cogent Communications Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cogent Communications and NOVA Technology 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 NOVA Technology 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 NOVA Technology i.e., NOVA Technology and Cogent Communications go up and down completely randomly.

Pair Corralation between NOVA Technology and Cogent Communications

Assuming the 90 days trading horizon NOVA Technology is expected to generate 0.13 times more return on investment than Cogent Communications. However, NOVA Technology is 7.93 times less risky than Cogent Communications. It trades about 0.3 of its potential returns per unit of risk. Cogent Communications Group is currently generating about -0.44 per unit of risk. If you would invest  2,210  in NOVA Technology on August 20, 2025 and sell it today you would earn a total of  151.00  from holding NOVA Technology or generate 6.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

NOVA Technology  vs.  Cogent Communications Group

 Performance 
       Timeline  
NOVA Technology 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days NOVA Technology has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.
Cogent Communications 

Risk-Adjusted Performance

Weakest

 
Weak
 
Strong
Over the last 90 days Cogent Communications Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

NOVA Technology and Cogent Communications Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with NOVA Technology and Cogent Communications

The main advantage of trading using opposite NOVA Technology and Cogent Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NOVA Technology 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 NOVA Technology and Cogent Communications Group 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.
Check out your portfolio center.
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.

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