Correlation Between Cognizant Technology and ALPEK SAB

Can any of the company-specific risk be diversified away by investing in both Cognizant Technology and ALPEK SAB 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 ALPEK SAB 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 ALPEK SAB de, you can compare the effects of market volatilities on Cognizant Technology and ALPEK SAB 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 ALPEK SAB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cognizant Technology and ALPEK SAB.

Diversification Opportunities for Cognizant Technology and ALPEK SAB

0.21

Correlation Coefficient

Cognizant Technology  ALPEK SAB

Modest diversification

The 3 months correlation between Cognizant and ALPEK is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and ALPEK SAB de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALPEK SAB de 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 ALPEK SAB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALPEK SAB de has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and ALPEK SAB go up and down completely randomly.

Pair Corralation between Cognizant Technology and ALPEK SAB

If you would invest  1,343  in ALPEK SAB de on October 24, 2024 and sell it today you would earn a total of  29.00  from holding ALPEK SAB de or generate 2.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Cognizant Technology Solutions  vs.  ALPEK SAB de

Cognizant Technology

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cognizant Technology Solutions are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly 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.

ALPEK SAB de

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ALPEK SAB de are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, ALPEK SAB may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Cognizant Technology and ALPEK SAB

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

The idea behind Cognizant Technology Solutions and ALPEK SAB de 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.