Correlation Between CleanTech Lithium and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both CleanTech Lithium 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 CleanTech Lithium and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CleanTech Lithium plc and Cognizant Technology Solutions, you can compare the effects of market volatilities on CleanTech Lithium 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 CleanTech Lithium with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of CleanTech Lithium and Cognizant Technology.
Diversification Opportunities for CleanTech Lithium and Cognizant Technology
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between CleanTech and Cognizant is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding CleanTech Lithium plc and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and CleanTech Lithium 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 CleanTech Lithium plc 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 CleanTech Lithium i.e., CleanTech Lithium and Cognizant Technology go up and down completely randomly.
Pair Corralation between CleanTech Lithium and Cognizant Technology
Assuming the 90 days trading horizon CleanTech Lithium plc is expected to under-perform the Cognizant Technology. In addition to that, CleanTech Lithium is 2.96 times more volatile than Cognizant Technology Solutions. It trades about -0.04 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.08 per unit of volatility. If you would invest 7,869 in Cognizant Technology Solutions on November 6, 2024 and sell it today you would earn a total of 449.00 from holding Cognizant Technology Solutions or generate 5.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.39% |
| Values | Daily Returns |
CleanTech Lithium plc vs. Cognizant Technology Solutions
Performance |
| Timeline |
| CleanTech Lithium plc |
| Cognizant Technology |
CleanTech Lithium and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CleanTech Lithium and Cognizant Technology
The main advantage of trading using opposite CleanTech Lithium and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CleanTech Lithium 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.| CleanTech Lithium vs. Gamma Communications PLC | CleanTech Lithium vs. Verizon Communications | CleanTech Lithium vs. Clean Power Hydrogen | CleanTech Lithium vs. Fonix Mobile plc |
| Cognizant Technology vs. First Class Metals | Cognizant Technology vs. McEwen Mining | Cognizant Technology vs. Wheaton Precious Metals | Cognizant Technology vs. Dairy Farm International |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
Other Complementary Tools
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing |