Correlation Between Accenture Plc and Global Develpmts

Can any of the company-specific risk be diversified away by investing in both Accenture Plc and Global Develpmts 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 Accenture Plc and Global Develpmts into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Accenture plc and Global Develpmts, you can compare the effects of market volatilities on Accenture Plc and Global Develpmts 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 Accenture Plc with a short position of Global Develpmts. Check out your portfolio center. Please also check ongoing floating volatility patterns of Accenture Plc and Global Develpmts.

Diversification Opportunities for Accenture Plc and Global Develpmts

-0.33

Correlation Coefficient

Accenture Plc  Global Develpmts

Very good diversification

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

Pair Corralation between Accenture Plc and Global Develpmts

Considering the 90-day investment horizon Accenture plc is expected to generate 0.16 times more return on investment than Global Develpmts. However, Accenture plc is 6.28 times less risky than Global Develpmts. It trades about 0.05 of its potential returns per unit of risk. Global Develpmts is currently generating about -0.01 per unit of risk. If you would invest  34,847  in Accenture plc on September 12, 2024 and sell it today you would earn a total of  1,443  from holding Accenture plc or generate 4.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Accenture plc  vs.  Global Develpmts

Accenture plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Accenture plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Accenture Plc is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Global Develpmts

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Global Develpmts has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Global Develpmts is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Accenture Plc and Global Develpmts

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

The idea behind Accenture plc and Global Develpmts 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.