Correlation Between Cognizant Technology and Singapore Airlines
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Singapore Airlines 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 Singapore Airlines 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 Singapore Airlines Limited, you can compare the effects of market volatilities on Cognizant Technology and Singapore Airlines 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 Singapore Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Singapore Airlines.
Diversification Opportunities for Cognizant Technology and Singapore Airlines
0.3 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cognizant and Singapore is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Singapore Airlines Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Singapore Airlines 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 Singapore Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Singapore Airlines has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Singapore Airlines go up and down completely randomly.
Pair Corralation between Cognizant Technology and Singapore Airlines
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 1.58 times more return on investment than Singapore Airlines. However, Cognizant Technology is 1.58 times more volatile than Singapore Airlines Limited. It trades about 0.1 of its potential returns per unit of risk. Singapore Airlines Limited is currently generating about 0.04 per unit of risk. If you would invest 7,344 in Cognizant Technology Solutions on November 7, 2024 and sell it today you would earn a total of 637.00 from holding Cognizant Technology Solutions or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Singapore Airlines Limited
Performance |
| Timeline |
| Cognizant Technology |
| Singapore Airlines |
Cognizant Technology and Singapore Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Singapore Airlines
The main advantage of trading using opposite Cognizant Technology and Singapore Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Singapore Airlines 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 Singapore Airlines will offset losses from the drop in Singapore Airlines' long position.| Cognizant Technology vs. FIRST SHIP LEASE | Cognizant Technology vs. Sixt Leasing SE | Cognizant Technology vs. FUYO GENERAL LEASE | Cognizant Technology vs. Global Ship Lease |
| Singapore Airlines vs. ADRIATIC METALS LS 013355 | Singapore Airlines vs. De Grey Mining | Singapore Airlines vs. Harmony Gold Mining | Singapore Airlines vs. CORNISH METALS INC |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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