Correlation Between Samsung Electronics and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Samsung Electronics 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 Samsung Electronics and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Samsung Electronics Co and Cognizant Technology Solutions, you can compare the effects of market volatilities on Samsung Electronics 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 Samsung Electronics with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Samsung Electronics and Cognizant Technology.
Diversification Opportunities for Samsung Electronics and Cognizant Technology
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Samsung and Cognizant is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Samsung Electronics Co and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Samsung Electronics 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 Samsung Electronics Co 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 Samsung Electronics i.e., Samsung Electronics and Cognizant Technology go up and down completely randomly.
Pair Corralation between Samsung Electronics and Cognizant Technology
Assuming the 90 days trading horizon Samsung Electronics Co is expected to under-perform the Cognizant Technology. In addition to that, Samsung Electronics is 1.76 times more volatile than Cognizant Technology Solutions. It trades about -0.02 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.19 per unit of volatility. If you would invest 7,479 in Cognizant Technology Solutions on August 29, 2024 and sell it today you would earn a total of 588.00 from holding Cognizant Technology Solutions or generate 7.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Samsung Electronics Co vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Samsung Electronics |
| Cognizant Technology |
Samsung Electronics and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Samsung Electronics and Cognizant Technology
The main advantage of trading using opposite Samsung Electronics and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Samsung Electronics 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.| Samsung Electronics vs. Lundin Mining Corp | Samsung Electronics vs. Metals Exploration Plc | Samsung Electronics vs. Check Point Software | Samsung Electronics vs. GreenX Metals |
| Cognizant Technology vs. Lendinvest PLC | Cognizant Technology vs. Neometals | Cognizant Technology vs. Coor Service Management | Cognizant Technology vs. Albion Technology General |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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