Correlation Between Alupar Investimento and Cognizant Technology

Can any of the company-specific risk be diversified away by investing in both Alupar Investimento and Cognizant Technology 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 Alupar Investimento and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alupar Investimento SA and Cognizant Technology Solutions, you can compare the effects of market volatilities on Alupar Investimento and Cognizant Technology 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 Alupar Investimento with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alupar Investimento and Cognizant Technology.

Diversification Opportunities for Alupar Investimento and Cognizant Technology

-0.54

Correlation Coefficient

Alupar Investimento  Cognizant Technology

Excellent diversification

The 3 months correlation between Alupar and Cognizant is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Alupar Investimento SA and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and Alupar Investimento 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 Alupar Investimento SA are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of Alupar Investimento i.e., Alupar Investimento and Cognizant Technology go up and down completely randomly.

Pair Corralation between Alupar Investimento and Cognizant Technology

Assuming the 90 days trading horizon Alupar Investimento SA is expected to under-perform the Cognizant Technology. In addition to that, Alupar Investimento is 1.76 times more volatile than Cognizant Technology Solutions. It trades about -0.1 of its total potential returns per unit of risk. Cognizant Technology Solutions is currently generating about 0.08 per unit of volatility. If you would invest  41,916  in Cognizant Technology Solutions on October 9, 2024 and sell it today you would earn a total of  1,417  from holding Cognizant Technology Solutions or generate 3.38% return on investment over 90 days.

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

Alupar Investimento SA  vs.  Cognizant Technology Solutions

Alupar Investimento

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alupar Investimento SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Preferred Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Cognizant Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Cognizant Technology Solutions are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Cognizant Technology is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alupar Investimento and Cognizant Technology

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

The idea behind Alupar Investimento SA and Cognizant Technology Solutions 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.