Correlation Between Teleperformance and ADM Endeavors

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

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

Diversification Opportunities for Teleperformance and ADM Endeavors

0.22

Correlation Coefficient

Teleperformance  ADM Endeavors

Modest diversification

The 3 months correlation between Teleperformance and ADM is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and ADM Endeavors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADM Endeavors 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 ADM Endeavors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADM Endeavors has no effect on the direction of Teleperformance i.e., Teleperformance and ADM Endeavors go up and down completely randomly.

Pair Corralation between Teleperformance and ADM Endeavors

Assuming the 90 days horizon Teleperformance SE is expected to under-perform the ADM Endeavors. But the pink sheet apears to be less risky and, when comparing its historical volatility, Teleperformance SE is 3.11 times less risky than ADM Endeavors. The pink sheet trades about -0.08 of its potential returns per unit of risk. The ADM Endeavors is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5.00  in ADM Endeavors on September 4, 2024 and sell it today you would earn a total of  0.38  from holding ADM Endeavors or generate 7.6% return on investment over 90 days.

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

Teleperformance SE  vs.  ADM Endeavors

Teleperformance SE

Risk-Adjusted Performance

0 of 100

Very Weak

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

ADM Endeavors

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADM Endeavors are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak primary indicators, ADM Endeavors reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teleperformance and ADM Endeavors

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

The idea behind Teleperformance SE and ADM Endeavors 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.