Correlation Between GP Investments and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both GP Investments 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 GP Investments and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GP Investments and Cognizant Technology Solutions, you can compare the effects of market volatilities on GP Investments 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 GP Investments with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of GP Investments and Cognizant Technology.
Diversification Opportunities for GP Investments and Cognizant Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between GPIV33 and Cognizant is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding GP Investments and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and GP Investments 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 GP Investments 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 GP Investments i.e., GP Investments and Cognizant Technology go up and down completely randomly.
Pair Corralation between GP Investments and Cognizant Technology
Assuming the 90 days trading horizon GP Investments is expected to generate 18.14 times more return on investment than Cognizant Technology. However, GP Investments is 18.14 times more volatile than Cognizant Technology Solutions. It trades about 0.13 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.27 per unit of risk. If you would invest 373.00 in GP Investments on August 28, 2024 and sell it today you would earn a total of 27.00 from holding GP Investments or generate 7.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
GP Investments vs. Cognizant Technology Solutions
Performance |
| Timeline |
| GP Investments |
| Cognizant Technology |
GP Investments and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GP Investments and Cognizant Technology
The main advantage of trading using opposite GP Investments and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GP Investments 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.| GP Investments vs. Fras le SA | GP Investments vs. Clave Indices De | GP Investments vs. BTG Pactual Logstica | GP Investments vs. Telefonaktiebolaget LM Ericsson |
| Cognizant Technology vs. Fras le SA | Cognizant Technology vs. Clave Indices De | Cognizant Technology vs. BTG Pactual Logstica | Cognizant Technology vs. Telefonaktiebolaget LM Ericsson |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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