Correlation Between TERADATA and Air Products

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

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

Diversification Opportunities for TERADATA and Air Products

-0.06

Correlation Coefficient

TERADATA  Air Products

Good diversification

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

Pair Corralation between TERADATA and Air Products

If you would invest  2,760  in TERADATA on October 7, 2024 and sell it today you would earn a total of  240.00  from holding TERADATA or generate 8.7% return on investment over 90 days.

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

TERADATA  vs.  Air Products and

TERADATA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, TERADATA may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Air Products

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with TERADATA and Air Products

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

The idea behind TERADATA and Air Products and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.