Correlation Between Teleperformance and National Stock

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

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

Diversification Opportunities for Teleperformance and National Stock

0.9

Correlation Coefficient

Teleperformance  National Stock

Almost no diversification

The 3 months correlation between Teleperformance and National is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and National Stock Yards in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Stock Yards 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 National Stock. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Stock Yards has no effect on the direction of Teleperformance i.e., Teleperformance and National Stock go up and down completely randomly.

Pair Corralation between Teleperformance and National Stock

Assuming the 90 days horizon Teleperformance is expected to generate 1.65 times less return on investment than National Stock. But when comparing it to its historical volatility, Teleperformance SE is 1.06 times less risky than National Stock. It trades about 0.14 of its potential returns per unit of risk. National Stock Yards is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  30,500  in National Stock Yards on December 26, 2024 and sell it today you would earn a total of  14,299  from holding National Stock Yards or generate 46.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	88.33%
Values	Daily Returns

Teleperformance SE  vs.  National Stock Yards

Teleperformance SE

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teleperformance SE are ranked lower than 10 (%) 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.

National Stock Yards

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in National Stock Yards are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, National Stock exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teleperformance and National Stock

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

The idea behind Teleperformance SE and National Stock Yards 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.