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
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cognizant and FUJITSU is -0.38. 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
Assuming the 90 days horizon Cognizant Technology Solutions is expected to generate 0.83 times more return on investment than FUJITSU. However, Cognizant Technology Solutions is 1.2 times less risky than FUJITSU. It trades about 0.1 of its potential returns per unit of risk. FUJITSU LTD ADR is currently generating about 0.01 per unit of risk. If you would invest 6,907 in Cognizant Technology Solutions on September 5, 2024 and sell it today you would earn a total of 693.00 from holding Cognizant Technology Solutions or generate 10.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Cognizant Technology Solutions vs. FUJITSU LTD ADR
Performance |
Timeline |
Cognizant Technology |
FUJITSU LTD ADR |
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.Cognizant Technology vs. HEALTHCARE REAL A | Cognizant Technology vs. Bumrungrad Hospital Public | Cognizant Technology vs. Cardinal Health | Cognizant Technology vs. National Health Investors |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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