Correlation Between DATAGROUP and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both DATAGROUP and Cognizant Technology 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 DATAGROUP and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DATAGROUP SE and Cognizant Technology Solutions, you can compare the effects of market volatilities on DATAGROUP and Cognizant Technology 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 DATAGROUP with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of DATAGROUP and Cognizant Technology.
Diversification Opportunities for DATAGROUP and Cognizant Technology
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between DATAGROUP and Cognizant is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding DATAGROUP SE and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and DATAGROUP 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 DATAGROUP SE are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of DATAGROUP i.e., DATAGROUP and Cognizant Technology go up and down completely randomly.
Pair Corralation between DATAGROUP and Cognizant Technology
Assuming the 90 days trading horizon DATAGROUP SE is expected to under-perform the Cognizant Technology. In addition to that, DATAGROUP is 1.55 times more volatile than Cognizant Technology Solutions. It trades about 0.0 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.13 per unit of volatility. If you would invest 5,942 in Cognizant Technology Solutions on September 13, 2024 and sell it today you would earn a total of 1,656 from holding Cognizant Technology Solutions or generate 27.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
DATAGROUP SE vs. Cognizant Technology Solutions
Performance |
| Timeline |
| DATAGROUP SE |
| Cognizant Technology |
DATAGROUP and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DATAGROUP and Cognizant Technology
The main advantage of trading using opposite DATAGROUP and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DATAGROUP position performs unexpectedly, Cognizant Technology 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 Cognizant Technology will offset losses from the drop in Cognizant Technology's long position.| DATAGROUP vs. Cognizant Technology Solutions | DATAGROUP vs. Superior Plus Corp | DATAGROUP vs. SIVERS SEMICONDUCTORS AB | DATAGROUP vs. Norsk Hydro ASA |
| Cognizant Technology vs. Superior Plus Corp | Cognizant Technology vs. SIVERS SEMICONDUCTORS AB | Cognizant Technology vs. Norsk Hydro ASA | Cognizant Technology vs. Reliance Steel Aluminum |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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