Correlation Between Cognizant Technology and Grupo KUO
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Grupo KUO 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 Grupo KUO 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 Grupo KUO SAB, you can compare the effects of market volatilities on Cognizant Technology and Grupo KUO 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 Grupo KUO. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Grupo KUO.
Diversification Opportunities for Cognizant Technology and Grupo KUO
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cognizant and Grupo is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Grupo KUO SAB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo KUO SAB 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 Grupo KUO. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo KUO SAB has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Grupo KUO go up and down completely randomly.
Pair Corralation between Cognizant Technology and Grupo KUO
Assuming the 90 days trading horizon Cognizant Technology is expected to generate 6.62 times less return on investment than Grupo KUO. But when comparing it to its historical volatility, Cognizant Technology Solutions is 19.68 times less risky than Grupo KUO. It trades about 0.22 of its potential returns per unit of risk. Grupo KUO SAB is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 4,281 in Grupo KUO SAB on November 28, 2024 and sell it today you would earn a total of 119.00 from holding Grupo KUO SAB or generate 2.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Grupo KUO SAB
Performance |
| Timeline |
| Cognizant Technology |
| Grupo KUO SAB |
Cognizant Technology and Grupo KUO Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Grupo KUO
The main advantage of trading using opposite Cognizant Technology and Grupo KUO positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Grupo KUO 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 Grupo KUO will offset losses from the drop in Grupo KUO's long position.| Cognizant Technology vs. Verizon Communications | Cognizant Technology vs. Taiwan Semiconductor Manufacturing | Cognizant Technology vs. Southwest Airlines | Cognizant Technology vs. FibraHotel |
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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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