Correlation Between Sabien Technology and Cognizant Technology
Can any of the company-specific risk be diversified away by investing in both Sabien Technology 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 Sabien Technology and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sabien Technology Group and Cognizant Technology Solutions, you can compare the effects of market volatilities on Sabien Technology 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 Sabien Technology with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sabien Technology and Cognizant Technology.
Diversification Opportunities for Sabien Technology and Cognizant Technology
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Sabien and Cognizant is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Sabien Technology Group and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Sabien Technology 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 Sabien Technology Group 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 Sabien Technology i.e., Sabien Technology and Cognizant Technology go up and down completely randomly.
Pair Corralation between Sabien Technology and Cognizant Technology
Assuming the 90 days trading horizon Sabien Technology is expected to generate 2.76 times less return on investment than Cognizant Technology. In addition to that, Sabien Technology is 2.37 times more volatile than Cognizant Technology Solutions. It trades about 0.01 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.06 per unit of volatility. If you would invest 5,721 in Cognizant Technology Solutions on August 28, 2024 and sell it today you would earn a total of 2,353 from holding Cognizant Technology Solutions or generate 41.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.16% |
| Values | Daily Returns |
Sabien Technology Group vs. Cognizant Technology Solutions
Performance |
| Timeline |
| Sabien Technology |
| Cognizant Technology |
Sabien Technology and Cognizant Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sabien Technology and Cognizant Technology
The main advantage of trading using opposite Sabien Technology and Cognizant Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sabien Technology 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.| Sabien Technology vs. Catalyst Media Group | Sabien Technology vs. CATLIN GROUP | Sabien Technology vs. Tamburi Investment Partners | Sabien Technology vs. Magnora ASA |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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