Correlation Between Performant Financial and Teleperformance

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

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

Diversification Opportunities for Performant Financial and Teleperformance

0.86

Correlation Coefficient

Performant Financial  Teleperformance

Very poor diversification

The 3 months correlation between Performant and Teleperformance is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Performant Financial and Teleperformance SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance SE and Performant Financial 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 Performant Financial 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 Performant Financial i.e., Performant Financial and Teleperformance go up and down completely randomly.

Pair Corralation between Performant Financial and Teleperformance

Given the investment horizon of 90 days Performant Financial is expected to generate 1.19 times more return on investment than Teleperformance. However, Performant Financial is 1.19 times more volatile than Teleperformance SE. It trades about -0.04 of its potential returns per unit of risk. Teleperformance SE is currently generating about -0.07 per unit of risk. If you would invest  380.00  in Performant Financial on September 12, 2024 and sell it today you would lose (40.00) from holding Performant Financial or give up 10.53% of portfolio value over 90 days.

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

Performant Financial  vs.  Teleperformance SE

Performant Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Performant Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's primary indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains 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 Performant Financial and Teleperformance

The main advantage of trading using opposite Performant Financial and Teleperformance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performant Financial 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 Performant Financial 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.