Correlation Between Cognizant Technology and Banco Actinver

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

Diversification Opportunities for Cognizant Technology and Banco Actinver

0.33

Correlation Coefficient

Cognizant Technology  Banco Actinver

Weak diversification

The 3 months correlation between Cognizant and Banco is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Banco Actinver SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Banco Actinver SA 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 Banco Actinver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Banco Actinver SA has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Banco Actinver go up and down completely randomly.

Pair Corralation between Cognizant Technology and Banco Actinver

Assuming the 90 days trading horizon Cognizant Technology Solutions is expected to generate 0.04 times more return on investment than Banco Actinver. However, Cognizant Technology Solutions is 27.58 times less risky than Banco Actinver. It trades about 0.13 of its potential returns per unit of risk. Banco Actinver SA is currently generating about -0.11 per unit of risk. If you would invest  139,372  in Cognizant Technology Solutions on December 27, 2024 and sell it today you would earn a total of  628.00  from holding Cognizant Technology Solutions or generate 0.45% return on investment over 90 days.

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

Cognizant Technology Solutions  vs.  Banco Actinver SA

Cognizant Technology

Risk-Adjusted Performance

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.

Banco Actinver SA

Risk-Adjusted Performance

Very Weak

Over the last 90 days Banco Actinver SA has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Cognizant Technology and Banco Actinver

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

The idea behind Cognizant Technology Solutions and Banco Actinver SA 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.