Correlation Between Cognyte Software and Aquagold International

Can any of the company-specific risk be diversified away by investing in both Cognyte Software and Aquagold International 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 Cognyte Software and Aquagold International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cognyte Software and Aquagold International, you can compare the effects of market volatilities on Cognyte Software and Aquagold International 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 Cognyte Software with a short position of Aquagold International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognyte Software and Aquagold International.

Diversification Opportunities for Cognyte Software and Aquagold International

0.5

Correlation Coefficient

Cognyte Software  Aquagold International

Very weak diversification

The 3 months correlation between Cognyte and Aquagold is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Cognyte Software and Aquagold International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aquagold International and Cognyte Software 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 Cognyte Software are associated (or correlated) with Aquagold International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aquagold International has no effect on the direction of Cognyte Software i.e., Cognyte Software and Aquagold International go up and down completely randomly.

Pair Corralation between Cognyte Software and Aquagold International

Given the investment horizon of 90 days Cognyte Software is expected to generate 0.41 times more return on investment than Aquagold International. However, Cognyte Software is 2.46 times less risky than Aquagold International. It trades about -0.04 of its potential returns per unit of risk. Aquagold International is currently generating about -0.12 per unit of risk. If you would invest  860.00  in Cognyte Software on December 30, 2024 and sell it today you would lose (65.00) from holding Cognyte Software or give up 7.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.38%
Values	Daily Returns

Cognyte Software  vs.  Aquagold International

Cognyte Software

Risk-Adjusted Performance

Very Weak

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

Aquagold International

Risk-Adjusted Performance

Very Weak

Over the last 90 days Aquagold International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Cognyte Software and Aquagold International

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

The idea behind Cognyte Software and Aquagold International 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.