Correlation Between Pure Storage and TELES Informationstech

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

By analyzing existing cross correlation between Pure Storage and TELES Informationstechnologien AG, you can compare the effects of market volatilities on Pure Storage and TELES Informationstech 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 Pure Storage with a short position of TELES Informationstech. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pure Storage and TELES Informationstech.

Diversification Opportunities for Pure Storage and TELES Informationstech

0.26

Correlation Coefficient

Pure Storage  TELES Informationstech

Modest diversification

The 3 months correlation between Pure and TELES is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Pure Storage and TELES Informationstechnologien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TELES Informationstech and Pure Storage 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 Pure Storage are associated (or correlated) with TELES Informationstech. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TELES Informationstech has no effect on the direction of Pure Storage i.e., Pure Storage and TELES Informationstech go up and down completely randomly.

Pair Corralation between Pure Storage and TELES Informationstech

Assuming the 90 days horizon Pure Storage is expected to under-perform the TELES Informationstech. But the stock apears to be less risky and, when comparing its historical volatility, Pure Storage is 1.37 times less risky than TELES Informationstech. The stock trades about -0.12 of its potential returns per unit of risk. The TELES Informationstechnologien AG is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  64.00  in TELES Informationstechnologien AG on December 30, 2024 and sell it today you would lose (14.00) from holding TELES Informationstechnologien AG or give up 21.87% of portfolio value over 90 days.

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

Pure Storage  vs.  TELES Informationstechnologien

Pure Storage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pure Storage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain 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.

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Pure Storage and TELES Informationstech

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

The idea behind Pure Storage and TELES Informationstechnologien AG 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.