Correlation Between Cognizant Technology and Sabien Technology
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Sabien Technology 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 Sabien Technology 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 Sabien Technology Group, you can compare the effects of market volatilities on Cognizant Technology and Sabien Technology 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 Sabien Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Sabien Technology.
Diversification Opportunities for Cognizant Technology and Sabien Technology
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Sabien is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Sabien Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sabien Technology 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 Sabien Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sabien Technology has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Sabien Technology go up and down completely randomly.
Pair Corralation between Cognizant Technology and Sabien Technology
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.31 times more return on investment than Sabien Technology. However, Cognizant Technology Solutions is 3.26 times less risky than Sabien Technology. It trades about 0.48 of its potential returns per unit of risk. Sabien Technology Group is currently generating about -0.41 per unit of risk. If you would invest 7,692 in Cognizant Technology Solutions on November 7, 2024 and sell it today you would earn a total of 665.00 from holding Cognizant Technology Solutions or generate 8.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Sabien Technology Group
Performance |
| Timeline |
| Cognizant Technology |
| Sabien Technology |
Cognizant Technology and Sabien Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Sabien Technology
The main advantage of trading using opposite Cognizant Technology and Sabien Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Sabien Technology 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 Sabien Technology will offset losses from the drop in Sabien Technology's long position.| Cognizant Technology vs. First Class Metals | Cognizant Technology vs. McEwen Mining | Cognizant Technology vs. Wheaton Precious Metals | Cognizant Technology vs. Dairy Farm International |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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