Correlation Between Cognizant Technology and Lundin Mining
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Lundin Mining 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 Cognizant Technology and Lundin Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognizant Technology Solutions and Lundin Mining Corp, you can compare the effects of market volatilities on Cognizant Technology and Lundin Mining 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 Cognizant Technology with a short position of Lundin Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Lundin Mining.
Diversification Opportunities for Cognizant Technology and Lundin Mining
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and Lundin is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Lundin Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lundin Mining Corp and Cognizant 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 Cognizant Technology Solutions are associated (or correlated) with Lundin Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lundin Mining Corp has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Lundin Mining go up and down completely randomly.
Pair Corralation between Cognizant Technology and Lundin Mining
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 3.57 times less return on investment than Lundin Mining. But when comparing it to its historical volatility, Cognizant Technology Solutions is 2.03 times less risky than Lundin Mining. It trades about 0.05 of its potential returns per unit of risk. Lundin Mining Corp is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 6,735 in Lundin Mining Corp on August 25, 2024 and sell it today you would earn a total of 4,385 from holding Lundin Mining Corp or generate 65.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.2% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Lundin Mining Corp
Performance |
| Timeline |
| Cognizant Technology |
| Lundin Mining Corp |
Cognizant Technology and Lundin Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Lundin Mining
The main advantage of trading using opposite Cognizant Technology and Lundin Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Lundin Mining 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 Lundin Mining will offset losses from the drop in Lundin Mining's long position.| Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Hyundai Motor | Cognizant Technology vs. Toyota Motor Corp |
| Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Hyundai Motor | Lundin Mining vs. Toyota Motor Corp |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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