Correlation Between Grupo Hotelero and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Grupo Hotelero 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 Grupo Hotelero and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Grupo Hotelero Santa and Cognizant Technology Solutions, you can compare the effects of market volatilities on Grupo Hotelero 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 Grupo Hotelero with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Grupo Hotelero and Cognizant Technology.
Diversification Opportunities for Grupo Hotelero and Cognizant Technology
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Grupo and Cognizant is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Grupo Hotelero Santa and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Grupo Hotelero 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 Grupo Hotelero Santa 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 Grupo Hotelero i.e., Grupo Hotelero and Cognizant Technology go up and down completely randomly.
Pair Corralation between Grupo Hotelero and Cognizant Technology
Assuming the 90 days trading horizon Grupo Hotelero is expected to generate 4.06 times less return on investment than Cognizant Technology. In addition to that, Grupo Hotelero is 10.89 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 0.22 per unit of volatility. If you would invest 139,394 in Cognizant Technology Solutions on August 29, 2024 and sell it today you would earn a total of 606.00 from holding Cognizant Technology Solutions or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Grupo Hotelero Santa vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Grupo Hotelero Santa |
| Cognizant Technology |
Grupo Hotelero and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Grupo Hotelero and Cognizant Technology
The main advantage of trading using opposite Grupo Hotelero and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Grupo Hotelero 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.| Grupo Hotelero vs. Prudential Financial | Grupo Hotelero vs. Ameriprise Financial | Grupo Hotelero vs. GMxico Transportes SAB | Grupo Hotelero vs. Grupo Sports World |
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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