Correlation Between AXA SA and TERADATA

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

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

Diversification Opportunities for AXA SA and TERADATA

-0.07

Correlation Coefficient

AXA SA  TERADATA

Good diversification

The 3 months correlation between AXA and TERADATA is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding AXA SA and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and AXA SA 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 AXA SA 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 AXA SA i.e., AXA SA and TERADATA go up and down completely randomly.

Pair Corralation between AXA SA and TERADATA

Assuming the 90 days trading horizon AXA SA is expected to generate 8.31 times less return on investment than TERADATA. But when comparing it to its historical volatility, AXA SA is 1.03 times less risky than TERADATA. It trades about 0.01 of its potential returns per unit of risk. TERADATA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,940  in TERADATA on October 24, 2024 and sell it today you would earn a total of  80.00  from holding TERADATA or generate 2.72% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

AXA SA  vs.  TERADATA

AXA SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AXA SA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AXA SA 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

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, TERADATA is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with AXA SA and TERADATA

The main advantage of trading using opposite AXA SA and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AXA SA 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 AXA SA 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.