Correlation Between Neometals and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Neometals 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 Neometals and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neometals and Cognizant Technology Solutions, you can compare the effects of market volatilities on Neometals 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 Neometals with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neometals and Cognizant Technology.
Diversification Opportunities for Neometals and Cognizant Technology
-0.05 | Correlation Coefficient |
Good diversification
The 3 months correlation between Neometals and Cognizant is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Neometals and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Neometals 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 Neometals 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 Neometals i.e., Neometals and Cognizant Technology go up and down completely randomly.
Pair Corralation between Neometals and Cognizant Technology
Assuming the 90 days trading horizon Neometals is expected to under-perform the Cognizant Technology. But the stock apears to be less risky and, when comparing its historical volatility, Neometals is 1.71 times less risky than Cognizant Technology. The stock trades about -0.21 of its potential returns per unit of risk. The Cognizant Technology Solutions is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 7,479 in Cognizant Technology Solutions on August 29, 2024 and sell it today you would earn a total of 588.00 from holding Cognizant Technology Solutions or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Neometals vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Neometals |
| Cognizant Technology |
Neometals and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neometals and Cognizant Technology
The main advantage of trading using opposite Neometals and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neometals 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.The idea behind Neometals and Cognizant Technology Solutions pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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