Correlation Between Globant SA and Hackett

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

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

Diversification Opportunities for Globant SA and Hackett

0.55

Correlation Coefficient

Globant SA  Hackett

Very weak diversification

The 3 months correlation between Globant and Hackett is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Globant SA and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group and Globant SA 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 Globant SA are associated (or correlated) with Hackett. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hackett Group has no effect on the direction of Globant SA i.e., Globant SA and Hackett go up and down completely randomly.

Pair Corralation between Globant SA and Hackett

Given the investment horizon of 90 days Globant SA is expected to generate 1.43 times more return on investment than Hackett. However, Globant SA is 1.43 times more volatile than The Hackett Group. It trades about -0.09 of its potential returns per unit of risk. The Hackett Group is currently generating about -0.25 per unit of risk. If you would invest  22,186  in Globant SA on October 11, 2024 and sell it today you would lose (847.00) from holding Globant SA or give up 3.82% of portfolio value over 90 days.

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

Globant SA  vs.  The Hackett Group

Globant SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Globant SA is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Hackett Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Globant SA and Hackett

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

The idea behind Globant SA and The Hackett Group 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .