Correlation Between Hackett and Science Applications

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

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

Diversification Opportunities for Hackett and Science Applications

-0.21

Correlation Coefficient

Hackett  Science Applications

Very good diversification

The 3 months correlation between Hackett and Science is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding The Hackett Group and Science Applications Internati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Science Applications and Hackett 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 The Hackett Group are associated (or correlated) with Science Applications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Science Applications has no effect on the direction of Hackett i.e., Hackett and Science Applications go up and down completely randomly.

Pair Corralation between Hackett and Science Applications

Given the investment horizon of 90 days The Hackett Group is expected to under-perform the Science Applications. But the stock apears to be less risky and, when comparing its historical volatility, The Hackett Group is 2.42 times less risky than Science Applications. The stock trades about -0.06 of its potential returns per unit of risk. The Science Applications International is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  11,046  in Science Applications International on December 30, 2024 and sell it today you would earn a total of  207.00  from holding Science Applications International or generate 1.87% return on investment over 90 days.

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

The Hackett Group  vs.  Science Applications Internati

Hackett Group

Risk-Adjusted Performance

Very Weak

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

Science Applications

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Science Applications International are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound forward indicators, Science Applications is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Hackett and Science Applications

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

The idea behind The Hackett Group and Science Applications International 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.

Check out your portfolio center.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.