Correlation Between Teradata Corp and Credicorp

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

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

Diversification Opportunities for Teradata Corp and Credicorp

0.04

Correlation Coefficient

Teradata Corp  Credicorp

Significant diversification

The 3 months correlation between Teradata and Credicorp is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Credicorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Credicorp 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 Credicorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Credicorp has no effect on the direction of Teradata Corp i.e., Teradata Corp and Credicorp go up and down completely randomly.

Pair Corralation between Teradata Corp and Credicorp

Assuming the 90 days horizon Teradata Corp is expected to under-perform the Credicorp. In addition to that, Teradata Corp is 1.2 times more volatile than Credicorp. It trades about -0.03 of its total potential returns per unit of risk. Credicorp is currently generating about 0.08 per unit of volatility. If you would invest  13,768  in Credicorp on October 25, 2024 and sell it today you would earn a total of  3,732  from holding Credicorp or generate 27.11% return on investment over 90 days.

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

Teradata Corp  vs.  Credicorp

Teradata Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Teradata Corp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Credicorp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Credicorp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Credicorp is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Teradata Corp and Credicorp

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

The idea behind Teradata Corp and Credicorp 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 Anywhere module to track or share privately all of your investments from the convenience of any device.