Correlation Between Thoughtworks Holding and Hackett

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Can any of the company-specific risk be diversified away by investing in both Thoughtworks Holding 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 Thoughtworks Holding and Hackett into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thoughtworks Holding and The Hackett Group, you can compare the effects of market volatilities on Thoughtworks Holding 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 Thoughtworks Holding with a short position of Hackett. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thoughtworks Holding and Hackett.

Diversification Opportunities for Thoughtworks Holding and Hackett

0.72
  Correlation Coefficient

Poor diversification

The 3 months correlation between Thoughtworks and Hackett is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Thoughtworks Holding and The Hackett Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hackett Group 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 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 Thoughtworks Holding i.e., Thoughtworks Holding and Hackett go up and down completely randomly.

Pair Corralation between Thoughtworks Holding and Hackett

Given the investment horizon of 90 days Thoughtworks Holding is expected to generate 7.09 times less return on investment than Hackett. But when comparing it to its historical volatility, Thoughtworks Holding is 6.29 times less risky than Hackett. It trades about 0.11 of its potential returns per unit of risk. The Hackett Group is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  2,663  in The Hackett Group on September 17, 2024 and sell it today you would earn a total of  531.00  from holding The Hackett Group or generate 19.94% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy64.62%
ValuesDaily Returns

Thoughtworks Holding  vs.  The Hackett Group

 Performance 
       Timeline  
Thoughtworks Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Hackett Group 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in The Hackett Group are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent forward-looking signals, Hackett unveiled solid returns over the last few months and may actually be approaching a breakup point.

Thoughtworks Holding and Hackett Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Thoughtworks Holding and Hackett

The main advantage of trading using opposite Thoughtworks Holding and Hackett positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thoughtworks Holding 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 Thoughtworks Holding 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..

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