Correlation Between Cognizant Technology and Pinduoduo
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Pinduoduo 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 Pinduoduo 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 Pinduoduo, you can compare the effects of market volatilities on Cognizant Technology and Pinduoduo 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 Pinduoduo. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Pinduoduo.
Diversification Opportunities for Cognizant Technology and Pinduoduo
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and Pinduoduo is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Pinduoduo in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinduoduo 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 Pinduoduo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinduoduo has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Pinduoduo go up and down completely randomly.
Pair Corralation between Cognizant Technology and Pinduoduo
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.04 times more return on investment than Pinduoduo. However, Cognizant Technology Solutions is 23.05 times less risky than Pinduoduo. It trades about 0.26 of its potential returns per unit of risk. Pinduoduo is currently generating about -0.24 per unit of risk. If you would invest 42,957 in Cognizant Technology Solutions on August 30, 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 Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Pinduoduo
Performance |
| Timeline |
| Cognizant Technology |
| Pinduoduo |
Cognizant Technology and Pinduoduo Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Pinduoduo
The main advantage of trading using opposite Cognizant Technology and Pinduoduo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Pinduoduo 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 Pinduoduo will offset losses from the drop in Pinduoduo's long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. BTG Pactual Logstica | Cognizant Technology vs. Plano Plano Desenvolvimento | Cognizant Technology vs. The Procter Gamble |
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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 CEOs Directory module to screen CEOs from public companies around the world.
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