Correlation Between Cognizant Technology and Converge Technology
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and Converge 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 Cognizant Technology and Converge Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cognizant Technology Solutions and Converge Technology Solutions, you can compare the effects of market volatilities on Cognizant Technology and Converge 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 Cognizant Technology with a short position of Converge Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and Converge Technology.
Diversification Opportunities for Cognizant Technology and Converge Technology
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and Converge is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Converge Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Converge Technology and Cognizant 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 Cognizant Technology Solutions are associated (or correlated) with Converge Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Converge Technology has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Converge Technology go up and down completely randomly.
Pair Corralation between Cognizant Technology and Converge Technology
Given the investment horizon of 90 days Cognizant Technology Solutions is expected to under-perform the Converge Technology. But the stock apears to be less risky and, when comparing its historical volatility, Cognizant Technology Solutions is 2.06 times less risky than Converge Technology. The stock trades about -0.38 of its potential returns per unit of risk. The Converge Technology Solutions is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 433.00 in Converge Technology Solutions on January 18, 2024 and sell it today you would lose (37.00) from holding Converge Technology Solutions or give up 8.55% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Cognizant Technology Solutions vs. Converge Technology Solutions
Performance |
Timeline |
Cognizant Technology |
Converge Technology |
Cognizant Technology and Converge Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognizant Technology and Converge Technology
The main advantage of trading using opposite Cognizant Technology and Converge Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, Converge 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 Converge Technology will offset losses from the drop in Converge Technology's long position.Cognizant Technology vs. Globant SA | Cognizant Technology vs. Concentrix | Cognizant Technology vs. CDW Corp | Cognizant Technology vs. BigBearai Holdings |
Converge Technology vs. DXC Technology Co | Converge Technology vs. Wavedancer | Converge Technology vs. International Business Machines | Converge Technology vs. Usio Inc |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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