Correlation Between Cognizant Technology and InterCloud Systems

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

Diversification Opportunities for Cognizant Technology and InterCloud Systems

0.0

Correlation Coefficient

Cognizant Technology  InterCloud Systems

Pay attention - limited upside

The 3 months correlation between Cognizant and InterCloud is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and InterCloud Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InterCloud Systems 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 InterCloud Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InterCloud Systems has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and InterCloud Systems go up and down completely randomly.

Pair Corralation between Cognizant Technology and InterCloud Systems

If you would invest  0.01  in InterCloud Systems on February 5, 2024 and sell it today you would earn a total of  0.00  from holding InterCloud Systems or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	4.55%
Values	Daily Returns

Cognizant Technology Solutions  vs.  InterCloud Systems

Cognizant Technology

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cognizant Technology Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in June 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

InterCloud Systems

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days InterCloud Systems has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound essential indicators, InterCloud Systems is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Cognizant Technology and InterCloud Systems

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

The idea behind Cognizant Technology Solutions and InterCloud Systems 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.