Correlation Between Energisa and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Energisa 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 Energisa and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energisa SA and Cognizant Technology Solutions, you can compare the effects of market volatilities on Energisa 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 Energisa with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energisa and Cognizant Technology.
Diversification Opportunities for Energisa and Cognizant Technology
-0.48 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Energisa and Cognizant is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Energisa SA and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Energisa 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 Energisa SA 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 Energisa i.e., Energisa and Cognizant Technology go up and down completely randomly.
Pair Corralation between Energisa and Cognizant Technology
Assuming the 90 days trading horizon Energisa SA is expected to under-perform the Cognizant Technology. In addition to that, Energisa is 1.14 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 0.12 per unit of volatility. If you would invest 30,311 in Cognizant Technology Solutions on August 31, 2024 and sell it today you would earn a total of 13,022 from holding Cognizant Technology Solutions or generate 42.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 57.22% |
| Values | Daily Returns |
Energisa SA vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Energisa SA |
| Cognizant Technology |
Energisa and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energisa and Cognizant Technology
The main advantage of trading using opposite Energisa and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energisa 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.| Energisa vs. Equatorial Energia SA | Energisa vs. CPFL Energia SA | Energisa vs. Eneva SA | Energisa vs. Companhia de Saneamento |
| Cognizant Technology vs. Fiserv Inc | Cognizant Technology vs. Fidelity National Information | Cognizant Technology vs. Fras le SA | Cognizant Technology vs. Energisa 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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