Correlation Between Rockfire Resources and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Rockfire Resources 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 Rockfire Resources and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rockfire Resources plc and Cognizant Technology Solutions, you can compare the effects of market volatilities on Rockfire Resources 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 Rockfire Resources with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rockfire Resources and Cognizant Technology.
Diversification Opportunities for Rockfire Resources and Cognizant Technology
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Rockfire and Cognizant is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Rockfire Resources 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 Rockfire Resources 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 Rockfire Resources 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 Rockfire Resources i.e., Rockfire Resources and Cognizant Technology go up and down completely randomly.
Pair Corralation between Rockfire Resources and Cognizant Technology
Assuming the 90 days trading horizon Rockfire Resources plc is expected to under-perform the Cognizant Technology. In addition to that, Rockfire Resources is 4.17 times more volatile than Cognizant Technology Solutions. It trades about -0.03 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.05 per unit of volatility. If you would invest 6,400 in Cognizant Technology Solutions on August 28, 2024 and sell it today you would earn a total of 1,674 from holding Cognizant Technology Solutions or generate 26.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.77% |
| Values | Daily Returns |
Rockfire Resources plc vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Rockfire Resources plc |
| Cognizant Technology |
Rockfire Resources and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rockfire Resources and Cognizant Technology
The main advantage of trading using opposite Rockfire Resources and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rockfire Resources 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.| Rockfire Resources vs. Taylor Maritime Investments | Rockfire Resources vs. G5 Entertainment AB | Rockfire Resources vs. Flutter Entertainment PLC | Rockfire Resources vs. Hollywood Bowl Group |
| Cognizant Technology vs. Leroy Seafood Group | Cognizant Technology vs. Axfood AB | Cognizant Technology vs. Bell Food Group | Cognizant Technology vs. X FAB Silicon Foundries |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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