Correlation Between Perficient and Thoughtworks Holding

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

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

Diversification Opportunities for Perficient and Thoughtworks Holding

0.82

Correlation Coefficient

Perficient  Thoughtworks Holding

Very poor diversification

The 3 months correlation between Perficient and Thoughtworks is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Perficient and Thoughtworks Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thoughtworks Holding and Perficient 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 Perficient 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 Perficient i.e., Perficient and Thoughtworks Holding go up and down completely randomly.

Pair Corralation between Perficient and Thoughtworks Holding

Given the investment horizon of 90 days Perficient is expected to under-perform the Thoughtworks Holding. But the stock apears to be less risky and, when comparing its historical volatility, Perficient is 1.01 times less risky than Thoughtworks Holding. The stock trades about -0.25 of its potential returns per unit of risk. The Thoughtworks Holding is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  280.00  in Thoughtworks Holding on February 1, 2024 and sell it today you would lose (48.00) from holding Thoughtworks Holding or give up 17.14% of portfolio value over 90 days.

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

Perficient  vs.  Thoughtworks Holding

Perficient

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Perficient has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Thoughtworks Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thoughtworks Holding has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Perficient and Thoughtworks Holding

The main advantage of trading using opposite Perficient and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Perficient 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 Perficient 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.