Correlation Between Cognizant Technology and DATAGROUP
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and DATAGROUP 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 DATAGROUP 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 DATAGROUP SE, you can compare the effects of market volatilities on Cognizant Technology and DATAGROUP 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 DATAGROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and DATAGROUP.
Diversification Opportunities for Cognizant Technology and DATAGROUP
0.04 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and DATAGROUP is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and DATAGROUP SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATAGROUP SE 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 DATAGROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATAGROUP SE has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and DATAGROUP go up and down completely randomly.
Pair Corralation between Cognizant Technology and DATAGROUP
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 0.65 times more return on investment than DATAGROUP. However, Cognizant Technology Solutions is 1.54 times less risky than DATAGROUP. It trades about 0.14 of its potential returns per unit of risk. DATAGROUP SE is currently generating about -0.04 per unit of risk. If you would invest 5,873 in Cognizant Technology Solutions on August 29, 2024 and sell it today you would earn a total of 1,804 from holding Cognizant Technology Solutions or generate 30.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. DATAGROUP SE
Performance |
| Timeline |
| Cognizant Technology |
| DATAGROUP SE |
Cognizant Technology and DATAGROUP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and DATAGROUP
The main advantage of trading using opposite Cognizant Technology and DATAGROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, DATAGROUP 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 DATAGROUP will offset losses from the drop in DATAGROUP's long position.| Cognizant Technology vs. Accenture plc | Cognizant Technology vs. International Business Machines | Cognizant Technology vs. Superior Plus Corp | Cognizant Technology vs. SIVERS SEMICONDUCTORS AB |
| DATAGROUP vs. Accenture plc | DATAGROUP vs. International Business Machines | DATAGROUP vs. Superior Plus Corp | DATAGROUP vs. SIVERS SEMICONDUCTORS AB |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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