Correlation Between Clearwater Analytics and Mastech Holdings

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

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

Diversification Opportunities for Clearwater Analytics and Mastech Holdings

0.82

Correlation Coefficient

Clearwater Analytics  Mastech Holdings

Very poor diversification

The 3 months correlation between Clearwater and Mastech is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Clearwater Analytics Holdings and Mastech Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mastech Holdings and Clearwater Analytics 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 Clearwater Analytics Holdings are associated (or correlated) with Mastech Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mastech Holdings has no effect on the direction of Clearwater Analytics i.e., Clearwater Analytics and Mastech Holdings go up and down completely randomly.

Pair Corralation between Clearwater Analytics and Mastech Holdings

Given the investment horizon of 90 days Clearwater Analytics is expected to generate 2.36 times less return on investment than Mastech Holdings. But when comparing it to its historical volatility, Clearwater Analytics Holdings is 2.06 times less risky than Mastech Holdings. It trades about 0.13 of its potential returns per unit of risk. Mastech Holdings is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  994.00  in Mastech Holdings on September 16, 2024 and sell it today you would earn a total of  496.00  from holding Mastech Holdings or generate 49.9% return on investment over 90 days.

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

Clearwater Analytics Holdings  vs.  Mastech Holdings

Clearwater Analytics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Clearwater Analytics Holdings are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very abnormal basic indicators, Clearwater Analytics displayed solid returns over the last few months and may actually be approaching a breakup point.

Mastech Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mastech Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent technical indicators, Mastech Holdings demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Clearwater Analytics and Mastech Holdings

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

The idea behind Clearwater Analytics Holdings and Mastech Holdings 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.