Correlation Between Oil Natural and Cigniti Technologies

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

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

Diversification Opportunities for Oil Natural and Cigniti Technologies

-0.42

Correlation Coefficient

Oil Natural  Cigniti Technologies

Very good diversification

The 3 months correlation between Oil and Cigniti is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Cigniti Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigniti Technologies and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Cigniti Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cigniti Technologies has no effect on the direction of Oil Natural i.e., Oil Natural and Cigniti Technologies go up and down completely randomly.

Pair Corralation between Oil Natural and Cigniti Technologies

Assuming the 90 days trading horizon Oil Natural Gas is expected to under-perform the Cigniti Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Oil Natural Gas is 1.12 times less risky than Cigniti Technologies. The stock trades about -0.14 of its potential returns per unit of risk. The Cigniti Technologies Limited is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  137,130  in Cigniti Technologies Limited on September 5, 2024 and sell it today you would earn a total of  30,475  from holding Cigniti Technologies Limited or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Oil Natural Gas  vs.  Cigniti Technologies Limited

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Cigniti Technologies

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Cigniti Technologies Limited are ranked lower than 14 (%) 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.

Pair Trading with Oil Natural and Cigniti Technologies

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

The idea behind Oil Natural Gas and Cigniti Technologies 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.