Correlation Between EPAM Systems and Conduent
Can any of the company-specific risk be diversified away by investing in both EPAM Systems and Conduent 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 EPAM Systems and Conduent into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EPAM Systems and Conduent, you can compare the effects of market volatilities on EPAM Systems and Conduent 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 EPAM Systems with a short position of Conduent. Check out your portfolio center. Please also check ongoing floating volatility patterns of EPAM Systems and Conduent.
Diversification Opportunities for EPAM Systems and Conduent
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between EPAM and Conduent is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and Conduent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Conduent and EPAM Systems 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 EPAM Systems are associated (or correlated) with Conduent. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Conduent has no effect on the direction of EPAM Systems i.e., EPAM Systems and Conduent go up and down completely randomly.
Pair Corralation between EPAM Systems and Conduent
Given the investment horizon of 90 days EPAM Systems is expected to under-perform the Conduent. But the stock apears to be less risky and, when comparing its historical volatility, EPAM Systems is 1.05 times less risky than Conduent. The stock trades about -0.27 of its potential returns per unit of risk. The Conduent is currently generating about -0.13 of returns per unit of risk over similar time horizon. If you would invest 396.00 in Conduent on December 2, 2024 and sell it today you would lose (42.00) from holding Conduent or give up 10.61% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
EPAM Systems vs. Conduent
Performance |
Timeline |
EPAM Systems |
Conduent |
EPAM Systems and Conduent Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with EPAM Systems and Conduent
The main advantage of trading using opposite EPAM Systems and Conduent positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EPAM Systems position performs unexpectedly, Conduent 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 Conduent will offset losses from the drop in Conduent's long position.EPAM Systems vs. Concentrix | EPAM Systems vs. Gartner | EPAM Systems vs. Accenture plc | EPAM Systems vs. International Business Machines |
Conduent vs. Fidelity National Information | Conduent vs. International Business Machines | Conduent vs. Kyndryl Holdings | Conduent vs. DXC Technology Co |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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