Correlation Between S P and Cigniti Technologies

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

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

Diversification Opportunities for S P and Cigniti Technologies

0.32

Correlation Coefficient

S P  Cigniti Technologies

Weak diversification

The 3 months correlation between SPAL and Cigniti is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding S P Apparels and Cigniti Technologies Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cigniti Technologies and S P 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 S P Apparels 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 S P i.e., S P and Cigniti Technologies go up and down completely randomly.

Pair Corralation between S P and Cigniti Technologies

Assuming the 90 days trading horizon S P Apparels is expected to under-perform the Cigniti Technologies. In addition to that, S P is 1.11 times more volatile than Cigniti Technologies Limited. It trades about -0.03 of its total potential returns per unit of risk. Cigniti Technologies Limited is currently generating about 0.22 per unit of volatility. 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 Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

S P Apparels  vs.  Cigniti Technologies Limited

S P Apparels

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days S P Apparels has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, S P is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

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.

Pair Trading with S P and Cigniti Technologies

The main advantage of trading using opposite S P and Cigniti Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if S P 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 S P Apparels 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.

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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.