Correlation Between Global Develpmts and Accenture Plc

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

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

Diversification Opportunities for Global Develpmts and Accenture Plc

-0.33

Correlation Coefficient

Global Develpmts  Accenture Plc

Very good diversification

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

Pair Corralation between Global Develpmts and Accenture Plc

Given the investment horizon of 90 days Global Develpmts is expected to under-perform the Accenture Plc. In addition to that, Global Develpmts is 5.95 times more volatile than Accenture plc. It trades about -0.25 of its total potential returns per unit of risk. Accenture plc is currently generating about -0.3 per unit of volatility. If you would invest  38,495  in Accenture plc on December 2, 2024 and sell it today you would lose (3,645) from holding Accenture plc or give up 9.47% of portfolio value over 90 days.

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

Global Develpmts  vs.  Accenture plc

Global Develpmts

Risk-Adjusted Performance

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 conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Accenture plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with Global Develpmts and Accenture Plc

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

The idea behind Global Develpmts and Accenture plc 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.