Correlation Between Cognizant Technology and Renova Energia
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Renova Energia 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 Renova Energia 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 Renova Energia SA, you can compare the effects of market volatilities on Cognizant Technology and Renova Energia 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 Renova Energia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Renova Energia.
Diversification Opportunities for Cognizant Technology and Renova Energia
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Cognizant and Renova is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Renova Energia SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Renova Energia SA 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 Renova Energia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Renova Energia SA has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Renova Energia go up and down completely randomly.
Pair Corralation between Cognizant Technology and Renova Energia
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.39 times more return on investment than Renova Energia. However, Cognizant Technology Solutions is 2.59 times less risky than Renova Energia. It trades about 0.16 of its potential returns per unit of risk. Renova Energia SA is currently generating about 0.02 per unit of risk. If you would invest 34,830 in Cognizant Technology Solutions on September 5, 2024 and sell it today you would earn a total of 8,503 from holding Cognizant Technology Solutions or generate 24.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.43% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Renova Energia SA
Performance |
| Timeline |
| Cognizant Technology |
| Renova Energia SA |
Cognizant Technology and Renova Energia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Renova Energia
The main advantage of trading using opposite Cognizant Technology and Renova Energia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Renova Energia 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 Renova Energia will offset losses from the drop in Renova Energia's long position.The idea behind Cognizant Technology Solutions and Renova Energia SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Renova Energia vs. CVS Health | Renova Energia vs. Broadcom | Renova Energia vs. Multilaser Industrial SA | Renova Energia vs. Hospital Mater Dei |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |