Correlation Between Cognex and Mind Technology

Can any of the company-specific risk be diversified away by investing in both Cognex and Mind 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 Cognex and Mind Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cognex and Mind Technology, you can compare the effects of market volatilities on Cognex and Mind 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 Cognex with a short position of Mind Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognex and Mind Technology.

Diversification Opportunities for Cognex and Mind Technology

0.2

Correlation Coefficient

Cognex  Mind Technology

Modest diversification

The 3 months correlation between Cognex and Mind is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cognex and Mind Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mind Technology and Cognex 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 Cognex are associated (or correlated) with Mind Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mind Technology has no effect on the direction of Cognex i.e., Cognex and Mind Technology go up and down completely randomly.

Pair Corralation between Cognex and Mind Technology

Given the investment horizon of 90 days Cognex is expected to generate 7.55 times less return on investment than Mind Technology. But when comparing it to its historical volatility, Cognex is 1.32 times less risky than Mind Technology. It trades about 0.02 of its potential returns per unit of risk. Mind Technology is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  325.00  in Mind Technology on September 5, 2024 and sell it today you would earn a total of  52.00  from holding Mind Technology or generate 16.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Cognex  vs.  Mind Technology

Cognex

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Cognex are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong basic indicators, Cognex is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Mind Technology

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Mind Technology are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Mind Technology exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cognex and Mind Technology

The main advantage of trading using opposite Cognex and Mind Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognex position performs unexpectedly, Mind 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 Mind Technology will offset losses from the drop in Mind Technology's long position.

The idea behind Cognex and Mind Technology pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.