Correlation Between Thoughtworks Holding and Chindata Group

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

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

Diversification Opportunities for Thoughtworks Holding and Chindata Group

0.68

Correlation Coefficient

Thoughtworks Holding  Chindata Group

Poor diversification

The 3 months correlation between Thoughtworks and Chindata is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Thoughtworks Holding and Chindata Group Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chindata Group Holdings and Thoughtworks Holding 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 Thoughtworks Holding are associated (or correlated) with Chindata Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chindata Group Holdings has no effect on the direction of Thoughtworks Holding i.e., Thoughtworks Holding and Chindata Group go up and down completely randomly.

Pair Corralation between Thoughtworks Holding and Chindata Group

Given the investment horizon of 90 days Thoughtworks Holding is expected to under-perform the Chindata Group. In addition to that, Thoughtworks Holding is 1.13 times more volatile than Chindata Group Holdings. It trades about -0.03 of its total potential returns per unit of risk. Chindata Group Holdings is currently generating about 0.01 per unit of volatility. If you would invest  815.00  in Chindata Group Holdings on October 10, 2024 and sell it today you would lose (25.00) from holding Chindata Group Holdings or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	28.1%
Values	Daily Returns

Thoughtworks Holding  vs.  Chindata Group Holdings

Thoughtworks Holding

Risk-Adjusted Performance

0 of 100

OK

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.

Chindata Group Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chindata Group Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Chindata Group is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Thoughtworks Holding and Chindata Group

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

The idea behind Thoughtworks Holding and Chindata Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.