Correlation Between BE Semiconductor and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both BE Semiconductor 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 BE Semiconductor and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BE Semiconductor Industries and Cognizant Technology Solutions, you can compare the effects of market volatilities on BE Semiconductor 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 BE Semiconductor with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of BE Semiconductor and Cognizant Technology.
Diversification Opportunities for BE Semiconductor and Cognizant Technology
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between 0XVE and Cognizant is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding BE Semiconductor Industries and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and BE Semiconductor 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 BE Semiconductor Industries 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 BE Semiconductor i.e., BE Semiconductor and Cognizant Technology go up and down completely randomly.
Pair Corralation between BE Semiconductor and Cognizant Technology
Assuming the 90 days trading horizon BE Semiconductor Industries is expected to under-perform the Cognizant Technology. In addition to that, BE Semiconductor is 2.39 times more volatile than Cognizant Technology Solutions. It trades about -0.04 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.12 per unit of volatility. If you would invest 6,596 in Cognizant Technology Solutions on September 5, 2024 and sell it today you would earn a total of 1,419 from holding Cognizant Technology Solutions or generate 21.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BE Semiconductor Industries vs. Cognizant Technology Solutions
Performance |
| Timeline |
| BE Semiconductor Ind |
| Cognizant Technology |
BE Semiconductor and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BE Semiconductor and Cognizant Technology
The main advantage of trading using opposite BE Semiconductor and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BE Semiconductor 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.| BE Semiconductor vs. Samsung Electronics Co | BE Semiconductor vs. Samsung Electronics Co | BE Semiconductor vs. Hyundai Motor | BE Semiconductor vs. Toyota Motor Corp |
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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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