Correlation Between Corporate Travel and Teva Pharmaceutical

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

By analyzing existing cross correlation between Corporate Travel Management and Teva Pharmaceutical Industries, you can compare the effects of market volatilities on Corporate Travel and Teva Pharmaceutical 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 Corporate Travel with a short position of Teva Pharmaceutical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Travel and Teva Pharmaceutical.

Diversification Opportunities for Corporate Travel and Teva Pharmaceutical

-0.53

Correlation Coefficient

Corporate Travel  Teva Pharmaceutical

Excellent diversification

The 3 months correlation between Corporate and Teva is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Travel Management and Teva Pharmaceutical Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teva Pharmaceutical and Corporate Travel 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 Corporate Travel Management are associated (or correlated) with Teva Pharmaceutical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teva Pharmaceutical has no effect on the direction of Corporate Travel i.e., Corporate Travel and Teva Pharmaceutical go up and down completely randomly.

Pair Corralation between Corporate Travel and Teva Pharmaceutical

Assuming the 90 days trading horizon Corporate Travel Management is expected to generate 0.82 times more return on investment than Teva Pharmaceutical. However, Corporate Travel Management is 1.21 times less risky than Teva Pharmaceutical. It trades about 0.04 of its potential returns per unit of risk. Teva Pharmaceutical Industries is currently generating about -0.16 per unit of risk. If you would invest  760.00  in Corporate Travel Management on December 22, 2024 and sell it today you would earn a total of  30.00  from holding Corporate Travel Management or generate 3.95% return on investment over 90 days.

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

Corporate Travel Management  vs.  Teva Pharmaceutical Industries

Corporate Travel Man

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Teva Pharmaceutical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teva Pharmaceutical Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Corporate Travel and Teva Pharmaceutical

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

The idea behind Corporate Travel Management and Teva Pharmaceutical Industries 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..