Correlation Between London Security and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both London Security 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 London Security and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between London Security Plc and Cognizant Technology Solutions, you can compare the effects of market volatilities on London Security 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 London Security with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of London Security and Cognizant Technology.
Diversification Opportunities for London Security and Cognizant Technology
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between London and Cognizant is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding London Security 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 London Security 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 London Security 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 London Security i.e., London Security and Cognizant Technology go up and down completely randomly.
Pair Corralation between London Security and Cognizant Technology
If you would invest 340,000 in London Security Plc on October 13, 2024 and sell it today you would earn a total of 0.00 from holding London Security Plc or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
London Security Plc vs. Cognizant Technology Solutions
Performance |
| Timeline |
| London Security Plc |
| Cognizant Technology |
London Security and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with London Security and Cognizant Technology
The main advantage of trading using opposite London Security and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if London Security 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.| London Security vs. Virgin Wines UK | London Security vs. URU Metals | London Security vs. Gaztransport et Technigaz | London Security vs. Vitec Software Group |
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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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