Correlation Between Cognizant Technology and Concentrix

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

Diversification Opportunities for Cognizant Technology and Concentrix

0.3

Correlation Coefficient

Cognizant Technology  Concentrix

Weak diversification

The 3 months correlation between Cognizant and Concentrix is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Cognizant Technology Solutions and Concentrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentrix 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 Concentrix. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Concentrix has no effect on the direction of Cognizant Technology i.e., Cognizant Technology and Concentrix go up and down completely randomly.

Pair Corralation between Cognizant Technology and Concentrix

Given the investment horizon of 90 days Cognizant Technology Solutions is expected to under-perform the Concentrix. But the stock apears to be less risky and, when comparing its historical volatility, Cognizant Technology Solutions is 2.29 times less risky than Concentrix. The stock trades about -0.1 of its potential returns per unit of risk. The Concentrix is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  5,009  in Concentrix on May 5, 2025 and sell it today you would lose (387.00) from holding Concentrix or give up 7.73% of portfolio value over 90 days.

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

Cognizant Technology Solutions  vs.  Concentrix

Cognizant Technology

Risk-Adjusted Performance

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 latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Concentrix

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Cognizant Technology and Concentrix

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

The idea behind Cognizant Technology Solutions and Concentrix 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.