Correlation Between EPAM Systems and TTEC Holdings

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

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

Diversification Opportunities for EPAM Systems and TTEC Holdings

-0.54

Correlation Coefficient

EPAM Systems  TTEC Holdings

Excellent diversification

The 3 months correlation between EPAM and TTEC is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding EPAM Systems and TTEC Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TTEC Holdings and EPAM Systems 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 EPAM Systems are associated (or correlated) with TTEC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TTEC Holdings has no effect on the direction of EPAM Systems i.e., EPAM Systems and TTEC Holdings go up and down completely randomly.

Pair Corralation between EPAM Systems and TTEC Holdings

Given the investment horizon of 90 days EPAM Systems is expected to generate 0.72 times more return on investment than TTEC Holdings. However, EPAM Systems is 1.38 times less risky than TTEC Holdings. It trades about 0.09 of its potential returns per unit of risk. TTEC Holdings is currently generating about -0.17 per unit of risk. If you would invest  19,849  in EPAM Systems on October 15, 2024 and sell it today you would earn a total of  2,713  from holding EPAM Systems or generate 13.67% return on investment over 90 days.

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

EPAM Systems  vs.  TTEC Holdings

EPAM Systems

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in EPAM Systems are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unsteady basic indicators, EPAM Systems displayed solid returns over the last few months and may actually be approaching a breakup point.

TTEC Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TTEC Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with EPAM Systems and TTEC Holdings

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

The idea behind EPAM Systems and TTEC Holdings 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.