Correlation Between Raytech Holding and Teradyne

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

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

Diversification Opportunities for Raytech Holding and Teradyne

0.27

Correlation Coefficient

Raytech Holding  Teradyne

Modest diversification

The 3 months correlation between Raytech and Teradyne is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Raytech Holding Limited and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Raytech Holding 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 Raytech Holding Limited 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 Raytech Holding i.e., Raytech Holding and Teradyne go up and down completely randomly.

Pair Corralation between Raytech Holding and Teradyne

Considering the 90-day investment horizon Raytech Holding Limited is expected to under-perform the Teradyne. In addition to that, Raytech Holding is 3.17 times more volatile than Teradyne. It trades about -0.05 of its total potential returns per unit of risk. Teradyne is currently generating about -0.05 per unit of volatility. If you would invest  11,677  in Teradyne on December 4, 2024 and sell it today you would lose (1,099) from holding Teradyne or give up 9.41% of portfolio value over 90 days.

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

Raytech Holding Limited  vs.  Teradyne

Raytech Holding

Risk-Adjusted Performance

Very Weak

Over the last 90 days Raytech Holding Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Teradyne

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with latest weak performance, the Stock's technical and fundamental indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the enterprise retail investors.

Pair Trading with Raytech Holding and Teradyne

The main advantage of trading using opposite Raytech Holding and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Raytech Holding 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 Raytech Holding Limited 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.