Correlation Between Lundin Mining and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Lundin Mining and Cognizant 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 Lundin Mining and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lundin Mining Corp and Cognizant Technology Solutions, you can compare the effects of market volatilities on Lundin Mining and Cognizant 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 Lundin Mining with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lundin Mining and Cognizant Technology.
Diversification Opportunities for Lundin Mining and Cognizant Technology
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Lundin and Cognizant is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Lundin Mining Corp and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Lundin Mining 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 Lundin Mining Corp are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Lundin Mining i.e., Lundin Mining and Cognizant Technology go up and down completely randomly.
Pair Corralation between Lundin Mining and Cognizant Technology
Assuming the 90 days trading horizon Lundin Mining Corp is expected to generate 2.03 times more return on investment than Cognizant Technology. However, Lundin Mining is 2.03 times more volatile than Cognizant Technology Solutions. It trades about 0.09 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.05 per unit of risk. 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 |
Lundin Mining Corp vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Lundin Mining Corp |
| Cognizant Technology |
Lundin Mining and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lundin Mining and Cognizant Technology
The main advantage of trading using opposite Lundin Mining and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lundin Mining position performs unexpectedly, Cognizant 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Samsung Electronics Co | Lundin Mining vs. Hyundai Motor | Lundin Mining vs. Toyota Motor Corp |
| Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Samsung Electronics Co | Cognizant Technology vs. Hyundai Motor | Cognizant Technology 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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