Correlation Between VNET Group and Cognizant Technology

Can any of the company-specific risk be diversified away by investing in both VNET Group and Cognizant Technology 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 VNET Group and Cognizant Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VNET Group DRC and Cognizant Technology Solutions, you can compare the effects of market volatilities on VNET Group and Cognizant Technology 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 VNET Group with a short position of Cognizant Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of VNET Group and Cognizant Technology.

Diversification Opportunities for VNET Group and Cognizant Technology

-0.02

Correlation Coefficient

VNET Group  Cognizant Technology

Good diversification

The 3 months correlation between VNET and Cognizant is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding VNET Group DRC and Cognizant Technology Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cognizant Technology and VNET Group 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 VNET Group DRC are associated (or correlated) with Cognizant Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cognizant Technology has no effect on the direction of VNET Group i.e., VNET Group and Cognizant Technology go up and down completely randomly.

Pair Corralation between VNET Group and Cognizant Technology

Given the investment horizon of 90 days VNET Group DRC is expected to generate 4.9 times more return on investment than Cognizant Technology. However, VNET Group is 4.9 times more volatile than Cognizant Technology Solutions. It trades about 0.04 of its potential returns per unit of risk. Cognizant Technology Solutions is currently generating about -0.46 per unit of risk. If you would invest  155.00  in VNET Group DRC on January 28, 2024 and sell it today you would earn a total of  3.00  from holding VNET Group DRC or generate 1.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

VNET Group DRC  vs.  Cognizant Technology Solutions

VNET Group DRC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VNET Group DRC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 May 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with VNET Group and Cognizant Technology

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

The idea behind VNET Group DRC and Cognizant Technology Solutions 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.