Correlation Between Cognizant Technology and United Overseas
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and United Overseas 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 United Overseas 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 United Overseas Bank, you can compare the effects of market volatilities on Cognizant Technology and United Overseas 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 United Overseas. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and United Overseas.
Diversification Opportunities for Cognizant Technology and United Overseas
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Cognizant and United is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and United Overseas Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Overseas Bank 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 United Overseas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Overseas Bank has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and United Overseas go up and down completely randomly.
Pair Corralation between Cognizant Technology and United Overseas
Assuming the 90 days horizon Cognizant Technology is expected to generate 2.43 times less return on investment than United Overseas. In addition to that, Cognizant Technology is 1.09 times more volatile than United Overseas Bank. It trades about 0.07 of its total potential returns per unit of risk. United Overseas Bank is currently generating about 0.19 per unit of volatility. If you would invest 1,964 in United Overseas Bank on November 3, 2024 and sell it today you would earn a total of 711.00 from holding United Overseas Bank or generate 36.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. United Overseas Bank
Performance |
| Timeline |
| Cognizant Technology |
| United Overseas Bank |
Cognizant Technology and United Overseas Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and United Overseas
The main advantage of trading using opposite Cognizant Technology and United Overseas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, United Overseas 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 United Overseas will offset losses from the drop in United Overseas' long position.| Cognizant Technology vs. SILICON LABORATOR | Cognizant Technology vs. Highlight Communications AG | Cognizant Technology vs. SEKISUI CHEMICAL | Cognizant Technology vs. Spirent Communications plc |
| United Overseas vs. Fast Retailing Co | United Overseas vs. Caseys General Stores | United Overseas vs. Iridium Communications | United Overseas vs. Cairo Communication SpA |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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