Correlation Between Maximus and Teleperformance

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

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

Diversification Opportunities for Maximus and Teleperformance

0.74

Correlation Coefficient

Maximus  Teleperformance

Poor diversification

The 3 months correlation between Maximus and Teleperformance is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Maximus and Teleperformance SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance SE and Maximus 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 Maximus are associated (or correlated) with Teleperformance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleperformance SE has no effect on the direction of Maximus i.e., Maximus and Teleperformance go up and down completely randomly.

Pair Corralation between Maximus and Teleperformance

Considering the 90-day investment horizon Maximus is expected to under-perform the Teleperformance. But the stock apears to be less risky and, when comparing its historical volatility, Maximus is 1.57 times less risky than Teleperformance. The stock trades about -0.17 of its potential returns per unit of risk. The Teleperformance SE is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  10,556  in Teleperformance SE on September 12, 2024 and sell it today you would lose (1,353) from holding Teleperformance SE or give up 12.82% of portfolio value over 90 days.

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

Maximus  vs.  Teleperformance SE

Maximus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Maximus 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 primary indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Teleperformance SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Maximus and Teleperformance

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

The idea behind Maximus and Teleperformance SE 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 Global Correlations module to find global opportunities by holding instruments from different markets.