Correlation Between Leroy Seafood and Teradata Corp

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

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

Diversification Opportunities for Leroy Seafood and Teradata Corp

0.06

Correlation Coefficient

Leroy Seafood  Teradata Corp

Significant diversification

The 3 months correlation between Leroy and Teradata is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Leroy Seafood Group and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Leroy Seafood 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 Leroy Seafood Group are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Leroy Seafood i.e., Leroy Seafood and Teradata Corp go up and down completely randomly.

Pair Corralation between Leroy Seafood and Teradata Corp

Assuming the 90 days trading horizon Leroy Seafood Group is expected to generate 0.42 times more return on investment than Teradata Corp. However, Leroy Seafood Group is 2.37 times less risky than Teradata Corp. It trades about 0.06 of its potential returns per unit of risk. Teradata Corp is currently generating about -0.18 per unit of risk. If you would invest  4,888  in Leroy Seafood Group on December 24, 2024 and sell it today you would earn a total of  222.00  from holding Leroy Seafood Group or generate 4.54% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	87.1%
Values	Daily Returns

Leroy Seafood Group  vs.  Teradata Corp

Leroy Seafood Group

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Leroy Seafood Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Leroy Seafood is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Teradata Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Leroy Seafood and Teradata Corp

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

The idea behind Leroy Seafood Group and Teradata Corp 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.