Correlation Between Thoughtworks Holding and Globant SA

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

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

Diversification Opportunities for Thoughtworks Holding and Globant SA

0.69

Correlation Coefficient

Thoughtworks Holding  Globant SA

Poor diversification

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

Pair Corralation between Thoughtworks Holding and Globant SA

Given the investment horizon of 90 days Thoughtworks Holding is expected to generate 1.47 times more return on investment than Globant SA. However, Thoughtworks Holding is 1.47 times more volatile than Globant SA. It trades about 0.17 of its potential returns per unit of risk. Globant SA is currently generating about 0.09 per unit of risk. If you would invest  265.00  in Thoughtworks Holding on September 27, 2024 and sell it today you would earn a total of  182.00  from holding Thoughtworks Holding or generate 68.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	76.19%
Values	Daily Returns

Thoughtworks Holding  vs.  Globant SA

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.

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.

Pair Trading with Thoughtworks Holding and Globant SA

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

The idea behind Thoughtworks Holding and Globant SA 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.