Correlation Between Teradata Corp and Neinor Homes

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

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

Diversification Opportunities for Teradata Corp and Neinor Homes

0.42

Correlation Coefficient

Teradata Corp  Neinor Homes

Very weak diversification

The 3 months correlation between Teradata and Neinor is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Neinor Homes SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neinor Homes SA and Teradata Corp 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 Teradata Corp are associated (or correlated) with Neinor Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neinor Homes SA has no effect on the direction of Teradata Corp i.e., Teradata Corp and Neinor Homes go up and down completely randomly.

Pair Corralation between Teradata Corp and Neinor Homes

Assuming the 90 days horizon Teradata Corp is expected to generate 19.58 times less return on investment than Neinor Homes. In addition to that, Teradata Corp is 1.13 times more volatile than Neinor Homes SA. It trades about 0.0 of its total potential returns per unit of risk. Neinor Homes SA is currently generating about 0.09 per unit of volatility. If you would invest  763.00  in Neinor Homes SA on October 23, 2024 and sell it today you would earn a total of  861.00  from holding Neinor Homes SA or generate 112.84% return on investment over 90 days.

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

Teradata Corp  vs.  Neinor Homes SA

Teradata Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradata Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Teradata Corp is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Neinor Homes SA

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neinor Homes SA are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Neinor Homes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Teradata Corp and Neinor Homes

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

The idea behind Teradata Corp and Neinor Homes SA 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.