Correlation Between Sunny Optical and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Sunny Optical 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 Sunny Optical and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sunny Optical Technology and Cognizant Technology Solutions, you can compare the effects of market volatilities on Sunny Optical 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 Sunny Optical with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sunny Optical and Cognizant Technology.
Diversification Opportunities for Sunny Optical and Cognizant Technology
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Sunny and Cognizant is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sunny Optical Technology and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Sunny Optical 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 Sunny Optical Technology 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 Sunny Optical i.e., Sunny Optical and Cognizant Technology go up and down completely randomly.
Pair Corralation between Sunny Optical and Cognizant Technology
Assuming the 90 days trading horizon Sunny Optical Technology is expected to generate 2.17 times more return on investment than Cognizant Technology. However, Sunny Optical is 2.17 times more volatile than Cognizant Technology Solutions. It trades about 0.21 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.16 per unit of risk. If you would invest 5,075 in Sunny Optical Technology on August 30, 2024 and sell it today you would earn a total of 965.00 from holding Sunny Optical Technology or generate 19.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sunny Optical Technology vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Sunny Optical Technology |
| Cognizant Technology |
Sunny Optical and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sunny Optical and Cognizant Technology
The main advantage of trading using opposite Sunny Optical and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sunny Optical 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.| Sunny Optical vs. Lendinvest PLC | Sunny Optical vs. Neometals | Sunny Optical vs. Albion Technology General | Sunny Optical vs. Jupiter Fund Management |
| Cognizant Technology vs. Lendinvest PLC | Cognizant Technology vs. Neometals | Cognizant Technology vs. Albion Technology General | Cognizant Technology vs. Jupiter Fund Management |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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