Correlation Between Cognizant Technology and METISA Metalrgica
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and METISA Metalrgica 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 METISA Metalrgica 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 METISA Metalrgica Timboense, you can compare the effects of market volatilities on Cognizant Technology and METISA Metalrgica 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 METISA Metalrgica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and METISA Metalrgica.
Diversification Opportunities for Cognizant Technology and METISA Metalrgica
-0.65 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Cognizant and METISA is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and METISA Metalrgica Timboense in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on METISA Metalrgica 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 METISA Metalrgica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of METISA Metalrgica has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and METISA Metalrgica go up and down completely randomly.
Pair Corralation between Cognizant Technology and METISA Metalrgica
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.07 times more return on investment than METISA Metalrgica. However, Cognizant Technology Solutions is 13.36 times less risky than METISA Metalrgica. It trades about 0.26 of its potential returns per unit of risk. METISA Metalrgica Timboense is currently generating about -0.04 per unit of risk. If you would invest 42,957 in Cognizant Technology Solutions on August 26, 2024 and sell it today you would earn a total of 376.00 from holding Cognizant Technology Solutions or generate 0.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. METISA Metalrgica Timboense
Performance |
| Timeline |
| Cognizant Technology |
| METISA Metalrgica |
Cognizant Technology and METISA Metalrgica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and METISA Metalrgica
The main advantage of trading using opposite Cognizant Technology and METISA Metalrgica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, METISA Metalrgica 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 METISA Metalrgica will offset losses from the drop in METISA Metalrgica's long position.| Cognizant Technology vs. Charter Communications | Cognizant Technology vs. New Oriental Education | Cognizant Technology vs. TAL Education Group | Cognizant Technology vs. United Airlines Holdings |
| METISA Metalrgica vs. Schulz SA | METISA Metalrgica vs. Fras le SA | METISA Metalrgica vs. PBG SA | METISA Metalrgica vs. Springs Global Participaes |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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