Correlation Between Tenet Fintech and Accenture Plc

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

By analyzing existing cross correlation between Tenet Fintech Group and Accenture plc, you can compare the effects of market volatilities on Tenet Fintech and Accenture Plc 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 Tenet Fintech with a short position of Accenture Plc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tenet Fintech and Accenture Plc.

Diversification Opportunities for Tenet Fintech and Accenture Plc

0.59

Correlation Coefficient

Tenet Fintech  Accenture Plc

Very weak diversification

The 3 months correlation between Tenet and Accenture is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tenet Fintech Group and Accenture plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Accenture plc and Tenet Fintech 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 Tenet Fintech Group are associated (or correlated) with Accenture Plc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Accenture plc has no effect on the direction of Tenet Fintech i.e., Tenet Fintech and Accenture Plc go up and down completely randomly.

Pair Corralation between Tenet Fintech and Accenture Plc

Assuming the 90 days horizon Tenet Fintech Group is expected to under-perform the Accenture Plc. In addition to that, Tenet Fintech is 5.95 times more volatile than Accenture plc. It trades about -0.03 of its total potential returns per unit of risk. Accenture plc is currently generating about -0.18 per unit of volatility. If you would invest  33,253  in Accenture plc on January 25, 2024 and sell it today you would lose (1,570) from holding Accenture plc or give up 4.72% of portfolio value over 90 days.

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

Tenet Fintech Group  vs.  Accenture plc

Tenet Fintech Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenet Fintech Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in May 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Accenture plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Accenture plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in May 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tenet Fintech and Accenture Plc

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

The idea behind Tenet Fintech Group and Accenture plc 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.