Correlation Between Web Global and Thoughtworks Holding

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

Diversification Opportunities for Web Global and Thoughtworks Holding

0.82
  Correlation Coefficient

Very poor diversification

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

Pair Corralation between Web Global and Thoughtworks Holding

Given the investment horizon of 90 days Web Global Holdings is expected to generate 4.94 times more return on investment than Thoughtworks Holding. However, Web Global is 4.94 times more volatile than Thoughtworks Holding. It trades about 0.19 of its potential returns per unit of risk. Thoughtworks Holding is currently generating about -0.02 per unit of risk. If you would invest  0.01  in Web Global Holdings on August 28, 2024 and sell it today you would earn a total of  0.50  from holding Web Global Holdings or generate 5000.0% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy32.24%
ValuesDaily Returns

Web Global Holdings  vs.  Thoughtworks Holding

 Performance 
       Timeline  
Web Global Holdings 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Web Global Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, Web Global is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.
Thoughtworks Holding 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
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.

Web Global and Thoughtworks Holding Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Web Global and Thoughtworks Holding

The main advantage of trading using opposite Web Global and Thoughtworks Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Web Global 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 Web Global Holdings 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.

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