Correlation Between Teva Pharmaceutical and Corporate Travel

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

By analyzing existing cross correlation between Teva Pharmaceutical Industries and Corporate Travel Management, you can compare the effects of market volatilities on Teva Pharmaceutical and Corporate Travel 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 Teva Pharmaceutical with a short position of Corporate Travel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teva Pharmaceutical and Corporate Travel.

Diversification Opportunities for Teva Pharmaceutical and Corporate Travel

-0.53

Correlation Coefficient

Teva Pharmaceutical  Corporate Travel

Excellent diversification

The 3 months correlation between Teva and Corporate is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Teva Pharmaceutical Industries and Corporate Travel Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corporate Travel Man and Teva Pharmaceutical 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 Teva Pharmaceutical Industries are associated (or correlated) with Corporate Travel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corporate Travel Man has no effect on the direction of Teva Pharmaceutical i.e., Teva Pharmaceutical and Corporate Travel go up and down completely randomly.

Pair Corralation between Teva Pharmaceutical and Corporate Travel

Assuming the 90 days horizon Teva Pharmaceutical Industries is expected to under-perform the Corporate Travel. In addition to that, Teva Pharmaceutical is 1.21 times more volatile than Corporate Travel Management. It trades about -0.16 of its total potential returns per unit of risk. Corporate Travel Management is currently generating about 0.04 per unit of volatility. If you would invest  760.00  in Corporate Travel Management on December 22, 2024 and sell it today you would earn a total of  30.00  from holding Corporate Travel Management or generate 3.95% return on investment over 90 days.

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

Teva Pharmaceutical Industries  vs.  Corporate Travel Management

Teva Pharmaceutical

Risk-Adjusted Performance

Very Weak

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

Corporate Travel Man

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Corporate Travel Management are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Corporate Travel is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Teva Pharmaceutical and Corporate Travel

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

The idea behind Teva Pharmaceutical Industries and Corporate Travel Management 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..