Correlation Between Promotora and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Promotora 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 Promotora and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Promotora y Operadora and Cognizant Technology Solutions, you can compare the effects of market volatilities on Promotora 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 Promotora with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Promotora and Cognizant Technology.
Diversification Opportunities for Promotora and Cognizant Technology
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Promotora and Cognizant is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Promotora y Operadora and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Promotora 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 Promotora y Operadora 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 Promotora i.e., Promotora and Cognizant Technology go up and down completely randomly.
Pair Corralation between Promotora and Cognizant Technology
Assuming the 90 days trading horizon Promotora is expected to generate 1.4 times less return on investment than Cognizant Technology. In addition to that, Promotora is 1.78 times more volatile than Cognizant Technology Solutions. It trades about 0.06 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.16 per unit of volatility. If you would invest 116,128 in Cognizant Technology Solutions on September 2, 2024 and sell it today you would earn a total of 23,872 from holding Cognizant Technology Solutions or generate 20.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.21% |
| Values | Daily Returns |
Promotora y Operadora vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Promotora y Operadora |
| Cognizant Technology |
Promotora and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Promotora and Cognizant Technology
The main advantage of trading using opposite Promotora and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Promotora 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.| Promotora vs. Gruma SAB de | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del | Promotora vs. Grupo Aeroportuario del |
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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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