Correlation Between Thoughtworks Holding and Perficient

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

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

Diversification Opportunities for Thoughtworks Holding and Perficient

0.83

Correlation Coefficient

Thoughtworks Holding  Perficient

Very poor diversification

The 3 months correlation between Thoughtworks and Perficient is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Thoughtworks Holding and Perficient in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Perficient 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 Perficient. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Perficient has no effect on the direction of Thoughtworks Holding i.e., Thoughtworks Holding and Perficient go up and down completely randomly.

Pair Corralation between Thoughtworks Holding and Perficient

Given the investment horizon of 90 days Thoughtworks Holding is expected to generate 0.87 times more return on investment than Perficient. However, Thoughtworks Holding is 1.15 times less risky than Perficient. It trades about -0.08 of its potential returns per unit of risk. Perficient is currently generating about -0.21 per unit of risk. If you would invest  250.00  in Thoughtworks Holding on January 31, 2024 and sell it today you would lose (14.00) from holding Thoughtworks Holding or give up 5.6% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	95.45%
Values	Daily Returns

Thoughtworks Holding  vs.  Perficient

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 May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

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 May 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Thoughtworks Holding and Perficient

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

The idea behind Thoughtworks Holding and Perficient 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.