Correlation Between Cognizant Technology and FUJITSU
Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and FUJITSU 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 FUJITSU 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 FUJITSU LTD ADR, you can compare the effects of market volatilities on Cognizant Technology and FUJITSU 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 FUJITSU. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and FUJITSU.
Diversification Opportunities for Cognizant Technology and FUJITSU
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Cognizant and FUJITSU is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and FUJITSU LTD ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FUJITSU LTD ADR 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 FUJITSU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FUJITSU LTD ADR has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and FUJITSU go up and down completely randomly.
Pair Corralation between Cognizant Technology and FUJITSU
If you would invest 0.00 in FUJITSU LTD ADR on September 7, 2024 and sell it today you would earn a total of 0.00 from holding FUJITSU LTD ADR or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Flat |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cognizant Technology Solutions vs. FUJITSU LTD ADR
Performance |
Timeline |
Cognizant Technology |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
FUJITSU LTD ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Cognizant Technology and FUJITSU Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Cognizant Technology and FUJITSU
The main advantage of trading using opposite Cognizant Technology and FUJITSU positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cognizant Technology position performs unexpectedly, FUJITSU 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 FUJITSU will offset losses from the drop in FUJITSU's long position.The idea behind Cognizant Technology Solutions and FUJITSU LTD ADR 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.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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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