Correlation Between Globant SA and Thoughtworks Holding

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

By analyzing existing cross correlation between Globant SA and Thoughtworks Holding, you can compare the effects of market volatilities on Globant SA and Thoughtworks Holding 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 Thoughtworks Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of Globant SA and Thoughtworks Holding.

Diversification Opportunities for Globant SA and Thoughtworks Holding

0.69

Correlation Coefficient

Globant SA  Thoughtworks Holding

Poor diversification

The 3 months correlation between Globant and Thoughtworks is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Globant SA and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding 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 Thoughtworks Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thoughtworks Holding has no effect on the direction of Globant SA i.e., Globant SA and Thoughtworks Holding go up and down completely randomly.

Pair Corralation between Globant SA and Thoughtworks Holding

Given the investment horizon of 90 days Globant SA is expected to generate 4.35 times more return on investment than Thoughtworks Holding. However, Globant SA is 4.35 times more volatile than Thoughtworks Holding. It trades about 0.02 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about 0.06 per unit of risk. If you would invest  21,881  in Globant SA on September 27, 2024 and sell it today you would earn a total of  129.00  from holding Globant SA or generate 0.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	30.23%
Values	Daily Returns

Globant SA  vs.  Thoughtworks Holding

Globant SA

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Globant SA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Globant SA sustained solid returns over the last few months and may actually be approaching a breakup point.

Thoughtworks Holding

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Thoughtworks Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable forward-looking signals, Thoughtworks Holding is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Globant SA and Thoughtworks Holding

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

The idea behind Globant SA and Thoughtworks Holding 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.