Correlation Between Teradyne and Quantum BioPharma

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

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

Diversification Opportunities for Teradyne and Quantum BioPharma

-0.54

Correlation Coefficient

Teradyne  Quantum BioPharma

Excellent diversification

The 3 months correlation between Teradyne and Quantum is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Quantum BioPharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quantum BioPharma and Teradyne 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 Teradyne are associated (or correlated) with Quantum BioPharma. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quantum BioPharma has no effect on the direction of Teradyne i.e., Teradyne and Quantum BioPharma go up and down completely randomly.

Pair Corralation between Teradyne and Quantum BioPharma

Considering the 90-day investment horizon Teradyne is expected to generate 0.38 times more return on investment than Quantum BioPharma. However, Teradyne is 2.6 times less risky than Quantum BioPharma. It trades about 0.15 of its potential returns per unit of risk. Quantum BioPharma is currently generating about -0.11 per unit of risk. If you would invest  11,163  in Teradyne on October 25, 2024 and sell it today you would earn a total of  2,317  from holding Teradyne or generate 20.76% return on investment over 90 days.

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

Teradyne  vs.  Quantum BioPharma

Teradyne

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne reported solid returns over the last few months and may actually be approaching a breakup point.

Quantum BioPharma

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quantum BioPharma has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Teradyne and Quantum BioPharma

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

The idea behind Teradyne and Quantum BioPharma 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.