Correlation Between Software Circle and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Software Circle 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 Software Circle and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Software Circle plc and Cognizant Technology Solutions, you can compare the effects of market volatilities on Software Circle 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 Software Circle with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Software Circle and Cognizant Technology.
Diversification Opportunities for Software Circle and Cognizant Technology
-0.31 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Software and Cognizant is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Software Circle 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 Software Circle 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 Software Circle 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 Software Circle i.e., Software Circle and Cognizant Technology go up and down completely randomly.
Pair Corralation between Software Circle and Cognizant Technology
Assuming the 90 days trading horizon Software Circle plc is expected to generate 0.37 times more return on investment than Cognizant Technology. However, Software Circle plc is 2.72 times less risky than Cognizant Technology. It trades about 0.27 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.29 per unit of risk. If you would invest 2,300 in Software Circle plc on October 11, 2024 and sell it today you would earn a total of 50.00 from holding Software Circle plc or generate 2.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Software Circle plc vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Software Circle plc |
| Cognizant Technology |
Software Circle and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Software Circle and Cognizant Technology
The main advantage of trading using opposite Software Circle and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Software Circle 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.| Software Circle vs. Europa Metals | Software Circle vs. First Class Metals | Software Circle vs. European Metals Holdings | Software Circle vs. Jacquet Metal Service |
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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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