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 PK 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

-0.23

Correlation Coefficient

Teleperformance  National Stock

Very good diversification

The 3 months correlation between Teleperformance and National is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance PK 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 PK 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 PK is expected to under-perform the National Stock. But the pink sheet apears to be less risky and, when comparing its historical volatility, Teleperformance PK is 1.79 times less risky than National Stock. The pink sheet trades about -0.12 of its potential returns per unit of risk. The National Stock Yards is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  22,700  in National Stock Yards on October 7, 2024 and sell it today you would earn a total of  7,800  from holding National Stock Yards or generate 34.36% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Teleperformance PK  vs.  National Stock Yards

Teleperformance PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

National Stock Yards

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in National Stock Yards are ranked lower than 10 (%) 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 PK 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 Transaction History module to view history of all your transactions and understand their impact on performance.