Correlation Between Cognizant Technology and Companhia Siderrgica
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Companhia Siderrgica 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 Companhia Siderrgica 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 Companhia Siderrgica Nacional, you can compare the effects of market volatilities on Cognizant Technology and Companhia Siderrgica 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 Companhia Siderrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Companhia Siderrgica.
Diversification Opportunities for Cognizant Technology and Companhia Siderrgica
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cognizant and Companhia is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Companhia Siderrgica Nacional in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Siderrgica 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 Companhia Siderrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Siderrgica has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Companhia Siderrgica go up and down completely randomly.
Pair Corralation between Cognizant Technology and Companhia Siderrgica
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.63 times more return on investment than Companhia Siderrgica. However, Cognizant Technology Solutions is 1.6 times less risky than Companhia Siderrgica. It trades about 0.07 of its potential returns per unit of risk. Companhia Siderrgica Nacional is currently generating about -0.05 per unit of risk. If you would invest 115,737 in Cognizant Technology Solutions on September 4, 2024 and sell it today you would earn a total of 24,263 from holding Cognizant Technology Solutions or generate 20.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Companhia Siderrgica Nacional
Performance |
| Timeline |
| Cognizant Technology |
| Companhia Siderrgica |
Cognizant Technology and Companhia Siderrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Companhia Siderrgica
The main advantage of trading using opposite Cognizant Technology and Companhia Siderrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Companhia Siderrgica 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 Companhia Siderrgica will offset losses from the drop in Companhia Siderrgica's long position.| Cognizant Technology vs. The Select Sector | Cognizant Technology vs. Promotora y Operadora | Cognizant Technology vs. SPDR Series Trust | Cognizant Technology vs. Vanguard World |
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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