Correlation Between Cigniti Technologies and Centum Electronics

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

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

Diversification Opportunities for Cigniti Technologies and Centum Electronics

-0.52

Correlation Coefficient

Cigniti Technologies  Centum Electronics

Excellent diversification

The 3 months correlation between Cigniti and Centum is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Cigniti Technologies Limited and Centum Electronics Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Centum Electronics and Cigniti Technologies 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 Cigniti Technologies Limited are associated (or correlated) with Centum Electronics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Centum Electronics has no effect on the direction of Cigniti Technologies i.e., Cigniti Technologies and Centum Electronics go up and down completely randomly.

Pair Corralation between Cigniti Technologies and Centum Electronics

Assuming the 90 days trading horizon Cigniti Technologies Limited is expected to generate 0.84 times more return on investment than Centum Electronics. However, Cigniti Technologies Limited is 1.19 times less risky than Centum Electronics. It trades about 0.22 of its potential returns per unit of risk. Centum Electronics Limited is currently generating about -0.02 per unit of risk. If you would invest  138,840  in Cigniti Technologies Limited on September 13, 2024 and sell it today you would earn a total of  46,855  from holding Cigniti Technologies Limited or generate 33.75% return on investment over 90 days.

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

Cigniti Technologies Limited  vs.  Centum Electronics Limited

Cigniti Technologies

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Cigniti Technologies Limited are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Cigniti Technologies demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Centum Electronics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Centum Electronics Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Centum Electronics is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cigniti Technologies and Centum Electronics

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

The idea behind Cigniti Technologies Limited and Centum Electronics Limited 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.