Correlation Between Ping An and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Ping An 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 Ping An and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ping An Insurance and Cognizant Technology Solutions, you can compare the effects of market volatilities on Ping An 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 Ping An with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ping An and Cognizant Technology.
Diversification Opportunities for Ping An and Cognizant Technology
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Ping and Cognizant is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding Ping An Insurance and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Ping An 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 Ping An Insurance 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 Ping An i.e., Ping An and Cognizant Technology go up and down completely randomly.
Pair Corralation between Ping An and Cognizant Technology
Assuming the 90 days trading horizon Ping An Insurance is expected to under-perform the Cognizant Technology. In addition to that, Ping An is 1.48 times more volatile than Cognizant Technology Solutions. It trades about -0.22 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.04 per unit of volatility. If you would invest 7,502 in Cognizant Technology Solutions on October 20, 2024 and sell it today you would earn a total of 55.00 from holding Cognizant Technology Solutions or generate 0.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Ping An Insurance vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Ping An Insurance |
| Cognizant Technology |
Ping An and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ping An and Cognizant Technology
The main advantage of trading using opposite Ping An and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ping An 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.| Ping An vs. Ryanair Holdings plc | Ping An vs. ALTAIR RES INC | Ping An vs. Electronic Arts | Ping An vs. Warner Music Group |
| Cognizant Technology vs. Accenture plc | Cognizant Technology vs. International Business Machines | Cognizant Technology vs. International Business Machines | Cognizant Technology vs. Infosys Limited |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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