Correlation Between Teradata Corp and Fobi AI

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

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

Diversification Opportunities for Teradata Corp and Fobi AI

-0.27

Correlation Coefficient

Teradata Corp  Fobi AI

Very good diversification

The 3 months correlation between Teradata and Fobi is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Fobi AI in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fobi AI and Teradata Corp 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 Teradata Corp are associated (or correlated) with Fobi AI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fobi AI has no effect on the direction of Teradata Corp i.e., Teradata Corp and Fobi AI go up and down completely randomly.

Pair Corralation between Teradata Corp and Fobi AI

Considering the 90-day investment horizon Teradata Corp is expected to generate 0.16 times more return on investment than Fobi AI. However, Teradata Corp is 6.18 times less risky than Fobi AI. It trades about -0.05 of its potential returns per unit of risk. Fobi AI is currently generating about -0.04 per unit of risk. If you would invest  3,338  in Teradata Corp on September 4, 2024 and sell it today you would lose (169.00) from holding Teradata Corp or give up 5.06% of portfolio value over 90 days.

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

Teradata Corp  vs.  Fobi AI

Teradata Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating fundamental indicators, Teradata Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

Fobi AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fobi AI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's forward indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Teradata Corp and Fobi AI

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

The idea behind Teradata Corp and Fobi AI 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.

Check out your portfolio center.

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.