Correlation Between TELES Informationstech and Eastman Chemical

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

By analyzing existing cross correlation between TELES Informationstechnologien AG and Eastman Chemical, you can compare the effects of market volatilities on TELES Informationstech and Eastman Chemical 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 TELES Informationstech with a short position of Eastman Chemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of TELES Informationstech and Eastman Chemical.

Diversification Opportunities for TELES Informationstech and Eastman Chemical

0.05

Correlation Coefficient

TELES Informationstech  Eastman Chemical

Significant diversification

The 3 months correlation between TELES and Eastman is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding TELES Informationstechnologien and Eastman Chemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eastman Chemical and TELES Informationstech 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 TELES Informationstechnologien AG are associated (or correlated) with Eastman Chemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eastman Chemical has no effect on the direction of TELES Informationstech i.e., TELES Informationstech and Eastman Chemical go up and down completely randomly.

Pair Corralation between TELES Informationstech and Eastman Chemical

Assuming the 90 days trading horizon TELES Informationstechnologien AG is expected to under-perform the Eastman Chemical. In addition to that, TELES Informationstech is 3.02 times more volatile than Eastman Chemical. It trades about -0.15 of its total potential returns per unit of risk. Eastman Chemical is currently generating about -0.05 per unit of volatility. If you would invest  9,786  in Eastman Chemical on November 29, 2024 and sell it today you would lose (460.00) from holding Eastman Chemical or give up 4.7% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

TELES Informationstechnologien  vs.  Eastman Chemical

TELES Informationstech

Risk-Adjusted Performance

Very Weak

Over the last 90 days TELES Informationstechnologien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's forward-looking signals remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Eastman Chemical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eastman Chemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eastman Chemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with TELES Informationstech and Eastman Chemical

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

The idea behind TELES Informationstechnologien AG and Eastman Chemical 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.