Correlation Between Gaming Realms and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Gaming Realms 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 Gaming Realms and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gaming Realms plc and Cognizant Technology Solutions, you can compare the effects of market volatilities on Gaming Realms 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 Gaming Realms with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gaming Realms and Cognizant Technology.
Diversification Opportunities for Gaming Realms and Cognizant Technology
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Gaming and Cognizant is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Gaming Realms plc and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Gaming Realms 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 Gaming Realms plc 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 Gaming Realms i.e., Gaming Realms and Cognizant Technology go up and down completely randomly.
Pair Corralation between Gaming Realms and Cognizant Technology
Assuming the 90 days trading horizon Gaming Realms plc is expected to generate 1.92 times more return on investment than Cognizant Technology. However, Gaming Realms is 1.92 times more volatile than Cognizant Technology Solutions. It trades about 0.14 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.19 per unit of risk. If you would invest 3,320 in Gaming Realms plc on August 29, 2024 and sell it today you would earn a total of 360.00 from holding Gaming Realms plc or generate 10.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gaming Realms plc vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Gaming Realms plc |
| Cognizant Technology |
Gaming Realms and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gaming Realms and Cognizant Technology
The main advantage of trading using opposite Gaming Realms and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gaming Realms 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.| Gaming Realms vs. Ondine Biomedical | Gaming Realms vs. Europa Metals | Gaming Realms vs. Lendinvest PLC | Gaming Realms vs. Neometals |
| Cognizant Technology vs. Lendinvest PLC | Cognizant Technology vs. Neometals | Cognizant Technology vs. Coor Service Management | Cognizant Technology vs. Albion Technology General |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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