Correlation Between Teradyne and Impala Platinum

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

By analyzing existing cross correlation between Teradyne and Impala Platinum Holdings, you can compare the effects of market volatilities on Teradyne and Impala Platinum 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 Impala Platinum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Impala Platinum.

Diversification Opportunities for Teradyne and Impala Platinum

-0.68

Correlation Coefficient

Teradyne  Impala Platinum

Excellent diversification

The 3 months correlation between Teradyne and Impala is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Impala Platinum Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Impala Platinum Holdings 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 Impala Platinum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Impala Platinum Holdings has no effect on the direction of Teradyne i.e., Teradyne and Impala Platinum go up and down completely randomly.

Pair Corralation between Teradyne and Impala Platinum

Assuming the 90 days horizon Teradyne is expected to generate 0.75 times more return on investment than Impala Platinum. However, Teradyne is 1.33 times less risky than Impala Platinum. It trades about 0.25 of its potential returns per unit of risk. Impala Platinum Holdings is currently generating about -0.21 per unit of risk. If you would invest  9,524  in Teradyne on October 6, 2024 and sell it today you would earn a total of  2,826  from holding Teradyne or generate 29.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	97.5%
Values	Daily Returns

Teradyne  vs.  Impala Platinum Holdings

Teradyne

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Teradyne may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Impala Platinum Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Impala Platinum Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Teradyne and Impala Platinum

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

The idea behind Teradyne and Impala Platinum Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.