Correlation Between CACI International and Concentrix

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

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

Diversification Opportunities for CACI International and Concentrix

0.24

Correlation Coefficient

CACI International  Concentrix

Modest diversification

The 3 months correlation between CACI and Concentrix is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding CACI International and Concentrix in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Concentrix and CACI International 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 CACI International 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 CACI International i.e., CACI International and Concentrix go up and down completely randomly.

Pair Corralation between CACI International and Concentrix

Given the investment horizon of 90 days CACI International is expected to under-perform the Concentrix. But the stock apears to be less risky and, when comparing its historical volatility, CACI International is 2.2 times less risky than Concentrix. The stock trades about -0.03 of its potential returns per unit of risk. The Concentrix is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  4,267  in Concentrix on December 29, 2024 and sell it today you would earn a total of  1,428  from holding Concentrix or generate 33.47% return on investment over 90 days.

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

CACI International  vs.  Concentrix

CACI International

Risk-Adjusted Performance

Very Weak

Over the last 90 days CACI International has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, CACI International is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Concentrix

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Concentrix are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather fragile basic indicators, Concentrix exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CACI International and Concentrix

The main advantage of trading using opposite CACI International and Concentrix positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CACI International 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 CACI International 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.