Correlation Between NTT DATA and TERADATA

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

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

Diversification Opportunities for NTT DATA and TERADATA

0.39

Correlation Coefficient

NTT DATA  TERADATA

Weak diversification

The 3 months correlation between NTT and TERADATA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding NTT DATA and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and NTT DATA 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 NTT DATA 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 NTT DATA i.e., NTT DATA and TERADATA go up and down completely randomly.

Pair Corralation between NTT DATA and TERADATA

Assuming the 90 days trading horizon NTT DATA is expected to generate 1.99 times more return on investment than TERADATA. However, NTT DATA is 1.99 times more volatile than TERADATA. It trades about 0.15 of its potential returns per unit of risk. TERADATA is currently generating about 0.02 per unit of risk. If you would invest  1,450  in NTT DATA on October 22, 2024 and sell it today you would earn a total of  340.00  from holding NTT DATA or generate 23.45% return on investment over 90 days.

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

NTT DATA   vs.  TERADATA

NTT DATA

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in NTT DATA are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, NTT DATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

TERADATA

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 1 (%) 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 NTT DATA and TERADATA

The main advantage of trading using opposite NTT DATA and TERADATA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NTT DATA 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 NTT DATA 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.

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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.