Correlation Between Cognizant Technology and Alfa Holdings
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Alfa Holdings 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 Alfa Holdings 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 Alfa Holdings SA, you can compare the effects of market volatilities on Cognizant Technology and Alfa Holdings 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 Alfa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Alfa Holdings.
Diversification Opportunities for Cognizant Technology and Alfa Holdings
-0.27 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Alfa is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Alfa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alfa Holdings 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 Alfa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alfa Holdings SA has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Alfa Holdings go up and down completely randomly.
Pair Corralation between Cognizant Technology and Alfa Holdings
Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.51 times more return on investment than Alfa Holdings. However, Cognizant Technology Solutions is 1.96 times less risky than Alfa Holdings. It trades about 0.07 of its potential returns per unit of risk. Alfa Holdings SA is currently generating about 0.03 per unit of risk. If you would invest 32,320 in Cognizant Technology Solutions on September 12, 2024 and sell it today you would earn a total of 11,013 from holding Cognizant Technology Solutions or generate 34.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 65.99% |
| Values | Daily Returns |
Cognizant Technology Solutions vs. Alfa Holdings SA
Performance |
| Timeline |
| Cognizant Technology |
| Alfa Holdings SA |
Cognizant Technology and Alfa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cognizant Technology and Alfa Holdings
The main advantage of trading using opposite Cognizant Technology and Alfa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Alfa Holdings 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 Alfa Holdings will offset losses from the drop in Alfa Holdings' long position.| Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Fundo Investimento Imobiliario | Cognizant Technology vs. LESTE FDO INV | Cognizant Technology vs. Fras le SA |
| Alfa Holdings vs. Ita Unibanco Holding | Alfa Holdings vs. Banco do Brasil | Alfa Holdings vs. Itasa Investimentos | Alfa Holdings vs. Petrleo Brasileiro SA |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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