Correlation Between Descartes Systems and Intapp

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

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

Diversification Opportunities for Descartes Systems and Intapp

-0.03

Correlation Coefficient

Descartes Systems  Intapp

Good diversification

The 3 months correlation between Descartes and Intapp is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Descartes Systems Group and Intapp Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intapp Inc and Descartes Systems 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 Descartes Systems Group are associated (or correlated) with Intapp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intapp Inc has no effect on the direction of Descartes Systems i.e., Descartes Systems and Intapp go up and down completely randomly.

Pair Corralation between Descartes Systems and Intapp

Given the investment horizon of 90 days Descartes Systems is expected to generate 2.14 times less return on investment than Intapp. But when comparing it to its historical volatility, Descartes Systems Group is 2.78 times less risky than Intapp. It trades about 0.29 of its potential returns per unit of risk. Intapp Inc is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,188  in Intapp Inc on February 26, 2024 and sell it today you would earn a total of  430.00  from holding Intapp Inc or generate 13.49% return on investment over 90 days.

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

Descartes Systems Group  vs.  Intapp Inc

Descartes Systems

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Descartes Systems Group are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak technical and fundamental indicators, Descartes Systems showed solid returns over the last few months and may actually be approaching a breakup point.

Intapp Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intapp Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Descartes Systems and Intapp

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

The idea behind Descartes Systems Group and Intapp Inc 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.