Correlation Between Teleperformance and ABM Industries

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

By analyzing existing cross correlation between Teleperformance SE and ABM Industries Incorporated, you can compare the effects of market volatilities on Teleperformance and ABM Industries 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 ABM Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teleperformance and ABM Industries.

Diversification Opportunities for Teleperformance and ABM Industries

-0.17

Correlation Coefficient

Teleperformance  ABM Industries

Good diversification

The 3 months correlation between Teleperformance and ABM is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and ABM Industries Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ABM Industries 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 ABM Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ABM Industries has no effect on the direction of Teleperformance i.e., Teleperformance and ABM Industries go up and down completely randomly.

Pair Corralation between Teleperformance and ABM Industries

Assuming the 90 days horizon Teleperformance SE is expected to generate 1.58 times more return on investment than ABM Industries. However, Teleperformance is 1.58 times more volatile than ABM Industries Incorporated. It trades about 0.11 of its potential returns per unit of risk. ABM Industries Incorporated is currently generating about -0.05 per unit of risk. If you would invest  8,501  in Teleperformance SE on December 30, 2024 and sell it today you would earn a total of  1,543  from holding Teleperformance SE or generate 18.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.71%
Values	Daily Returns

Teleperformance SE  vs.  ABM Industries Incorporated

Teleperformance SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teleperformance SE are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak technical and fundamental indicators, Teleperformance reported solid returns over the last few months and may actually be approaching a breakup point.

ABM Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days ABM Industries Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's fundamental drivers remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Teleperformance and ABM Industries

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

The idea behind Teleperformance SE and ABM Industries Incorporated 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..