Correlation Between Quaker Chemical and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Quaker Chemical 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 Quaker Chemical and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Quaker Chemical and Cognizant Technology Solutions, you can compare the effects of market volatilities on Quaker Chemical 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 Quaker Chemical with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Quaker Chemical and Cognizant Technology.
Diversification Opportunities for Quaker Chemical and Cognizant Technology
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Quaker and Cognizant is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Quaker Chemical and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Quaker Chemical 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 Quaker Chemical 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 Quaker Chemical i.e., Quaker Chemical and Cognizant Technology go up and down completely randomly.
Pair Corralation between Quaker Chemical and Cognizant Technology
Assuming the 90 days horizon Quaker Chemical is expected to under-perform the Cognizant Technology. But the stock apears to be less risky and, when comparing its historical volatility, Quaker Chemical is 1.06 times less risky than Cognizant Technology. The stock trades about -0.31 of its potential returns per unit of risk. The Cognizant Technology Solutions is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 7,716 in Cognizant Technology Solutions on September 15, 2024 and sell it today you would lose (39.00) from holding Cognizant Technology Solutions or give up 0.51% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Quaker Chemical vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Quaker Chemical |
| Cognizant Technology |
Quaker Chemical and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Quaker Chemical and Cognizant Technology
The main advantage of trading using opposite Quaker Chemical and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quaker Chemical 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.| Quaker Chemical vs. AAC TECHNOLOGHLDGADR | Quaker Chemical vs. HOCHSCHILD MINING | Quaker Chemical vs. OURGAME INTHOLDL 00005 | Quaker Chemical vs. Boyd Gaming |
| Cognizant Technology vs. Superior Plus Corp | Cognizant Technology vs. SIVERS SEMICONDUCTORS AB | Cognizant Technology vs. Norsk Hydro ASA | Cognizant Technology vs. Reliance Steel Aluminum |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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