Correlation Between Teleperformance and Lectra SA

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

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

Diversification Opportunities for Teleperformance and Lectra SA

0.73

Correlation Coefficient

Teleperformance  Lectra SA

Poor diversification

The 3 months correlation between Teleperformance and Lectra is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and Lectra SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lectra SA and Teleperformance 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 Teleperformance SE are associated (or correlated) with Lectra SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lectra SA has no effect on the direction of Teleperformance i.e., Teleperformance and Lectra SA go up and down completely randomly.

Pair Corralation between Teleperformance and Lectra SA

Assuming the 90 days trading horizon Teleperformance SE is expected to generate 1.07 times more return on investment than Lectra SA. However, Teleperformance is 1.07 times more volatile than Lectra SA. It trades about 0.1 of its potential returns per unit of risk. Lectra SA is currently generating about 0.06 per unit of risk. If you would invest  8,216  in Teleperformance SE on December 26, 2024 and sell it today you would earn a total of  1,172  from holding Teleperformance SE or generate 14.26% return on investment over 90 days.

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

Teleperformance SE  vs.  Lectra SA

Teleperformance SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teleperformance SE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Teleperformance sustained solid returns over the last few months and may actually be approaching a breakup point.

Lectra SA

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Lectra SA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Lectra SA may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Teleperformance and Lectra SA

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

The idea behind Teleperformance SE and Lectra SA 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.