Correlation Between Four Seasons and Teradyne

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

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

Diversification Opportunities for Four Seasons and Teradyne

0.13

Correlation Coefficient

Four Seasons  Teradyne

Average diversification

The 3 months correlation between Four and Teradyne is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Four Seasons Education and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Four Seasons 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 Four Seasons Education are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Four Seasons i.e., Four Seasons and Teradyne go up and down completely randomly.

Pair Corralation between Four Seasons and Teradyne

Given the investment horizon of 90 days Four Seasons Education is expected to under-perform the Teradyne. In addition to that, Four Seasons is 1.01 times more volatile than Teradyne. It trades about -0.21 of its total potential returns per unit of risk. Teradyne is currently generating about 0.24 per unit of volatility. If you would invest  11,956  in Teradyne on October 8, 2024 and sell it today you would earn a total of  1,104  from holding Teradyne or generate 9.23% return on investment over 90 days.

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

Four Seasons Education  vs.  Teradyne

Four Seasons Education

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Four Seasons Education has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Teradyne

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable technical and fundamental indicators, Teradyne is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Four Seasons and Teradyne

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

The idea behind Four Seasons Education and Teradyne 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.