Correlation Between Cognizant Technology and Alternet Systems
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Alternet Systems 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 Alternet Systems 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 Alternet Systems, you can compare the effects of market volatilities on Cognizant Technology and Alternet Systems 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 Alternet Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Alternet Systems.
Diversification Opportunities for Cognizant Technology and Alternet Systems
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and Alternet is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Alternet Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alternet Systems 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 Alternet Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alternet Systems has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Alternet Systems go up and down completely randomly.
Pair Corralation between Cognizant Technology and Alternet Systems
Given the investment horizon of 90 days Cognizant Technology Solutions is expected to generate 0.13 times more return on investment than Alternet Systems. However, Cognizant Technology Solutions is 7.46 times less risky than Alternet Systems. It trades about 0.21 of its potential returns per unit of risk. Alternet Systems is currently generating about -0.03 per unit of risk. If you would invest 7,432 in Cognizant Technology Solutions on September 2, 2024 and sell it today you would earn a total of 617.00 from holding Cognizant Technology Solutions or generate 8.3% 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. Alternet Systems
Performance |
| Timeline |
| Cognizant Technology |
| Alternet Systems |
Cognizant Technology and Alternet Systems Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Alternet Systems
The main advantage of trading using opposite Cognizant Technology and Alternet Systems positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Alternet Systems 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 Alternet Systems will offset losses from the drop in Alternet Systems' long position.| Cognizant Technology vs. FiscalNote Holdings | Cognizant Technology vs. Innodata | Cognizant Technology vs. Aurora Innovation | Cognizant Technology vs. Conduent |
| Alternet Systems vs. The Travelers Companies | Alternet Systems vs. Walt Disney | Alternet Systems vs. Home Depot | Alternet Systems vs. Procter Gamble |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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