Correlation Between Cognizant Technology and Genpact
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Genpact 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 Genpact 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 Genpact Limited, you can compare the effects of market volatilities on Cognizant Technology and Genpact 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 Genpact. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Genpact.
Diversification Opportunities for Cognizant Technology and Genpact
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Cognizant and Genpact is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Genpact Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Genpact Limited 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 Genpact. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Genpact Limited has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Genpact go up and down completely randomly.
Pair Corralation between Cognizant Technology and Genpact
Given the investment horizon of 90 days Cognizant Technology Solutions is expected to generate 0.84 times more return on investment than Genpact. However, Cognizant Technology Solutions is 1.19 times less risky than Genpact. It trades about 0.06 of its potential returns per unit of risk. Genpact Limited is currently generating about 0.02 per unit of risk. If you would invest 5,745 in Cognizant Technology Solutions on August 28, 2024 and sell it today you would earn a total of 2,318 from holding Cognizant Technology Solutions or generate 40.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Genpact Limited
Performance |
| Timeline |
| Cognizant Technology |
| Genpact Limited |
Cognizant Technology and Genpact Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Genpact
The main advantage of trading using opposite Cognizant Technology and Genpact positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Genpact 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 Genpact will offset losses from the drop in Genpact's long position.| Cognizant Technology vs. Wipro Limited ADR | Cognizant Technology vs. Accenture plc | Cognizant Technology vs. Gartner | Cognizant Technology vs. CACI International |
| Genpact vs. Oneconnect Financial Technology | Genpact vs. Global Business Travel | Genpact vs. Alight Inc | Genpact vs. CS Disco LLC |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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