Correlation Between Science Applications and TERADATA

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

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

Diversification Opportunities for Science Applications and TERADATA

0.52

Correlation Coefficient

Science Applications  TERADATA

Very weak diversification

The 3 months correlation between Science and TERADATA is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Science Applications Internati and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and Science Applications 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 Science Applications International are associated (or correlated) with TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of Science Applications i.e., Science Applications and TERADATA go up and down completely randomly.

Pair Corralation between Science Applications and TERADATA

Assuming the 90 days trading horizon Science Applications International is expected to generate 0.89 times more return on investment than TERADATA. However, Science Applications International is 1.12 times less risky than TERADATA. It trades about 0.02 of its potential returns per unit of risk. TERADATA is currently generating about 0.0 per unit of risk. If you would invest  10,020  in Science Applications International on August 31, 2024 and sell it today you would earn a total of  1,480  from holding Science Applications International or generate 14.77% return on investment over 90 days.

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

Science Applications Internati  vs.  TERADATA

Science Applications

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Science Applications International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Science Applications is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

TERADATA

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, TERADATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Science Applications and TERADATA

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

The idea behind Science Applications International and TERADATA 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.