Correlation Between Capgemini and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Capgemini 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 Capgemini and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capgemini SE and Cognizant Technology Solutions, you can compare the effects of market volatilities on Capgemini 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 Capgemini with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capgemini and Cognizant Technology.
Diversification Opportunities for Capgemini and Cognizant Technology
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Capgemini and Cognizant is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Capgemini SE and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Capgemini 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 Capgemini SE 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 Capgemini i.e., Capgemini and Cognizant Technology go up and down completely randomly.
Pair Corralation between Capgemini and Cognizant Technology
Assuming the 90 days horizon Capgemini SE is expected to under-perform the Cognizant Technology. But the stock apears to be less risky and, when comparing its historical volatility, Capgemini SE is 1.31 times less risky than Cognizant Technology. The stock trades about -0.21 of its potential returns per unit of risk. The Cognizant Technology Solutions is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 6,859 in Cognizant Technology Solutions on September 1, 2024 and sell it today you would earn a total of 758.00 from holding Cognizant Technology Solutions or generate 11.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Capgemini SE vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Capgemini SE |
| Cognizant Technology |
Capgemini and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capgemini and Cognizant Technology
The main advantage of trading using opposite Capgemini and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capgemini 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.| Capgemini vs. Air New Zealand | Capgemini vs. ADRIATIC METALS LS 013355 | Capgemini vs. Enter Air SA | Capgemini vs. LION ONE METALS |
| Cognizant Technology vs. COSMOSTEEL HLDGS | Cognizant Technology vs. United Breweries Co | Cognizant Technology vs. Tianjin Capital Environmental | Cognizant Technology vs. THAI BEVERAGE |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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