Correlation Between Teleperformance and Thomson Reuters

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

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

Diversification Opportunities for Teleperformance and Thomson Reuters

0.68

Correlation Coefficient

Teleperformance  Thomson Reuters

Poor diversification

The 3 months correlation between Teleperformance and Thomson is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance PK and Thomson Reuters Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thomson Reuters Corp 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 Thomson Reuters. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thomson Reuters Corp has no effect on the direction of Teleperformance i.e., Teleperformance and Thomson Reuters go up and down completely randomly.

Pair Corralation between Teleperformance and Thomson Reuters

Assuming the 90 days horizon Teleperformance PK is expected to under-perform the Thomson Reuters. In addition to that, Teleperformance is 2.35 times more volatile than Thomson Reuters Corp. It trades about -0.07 of its total potential returns per unit of risk. Thomson Reuters Corp is currently generating about -0.04 per unit of volatility. If you would invest  16,759  in Thomson Reuters Corp on September 3, 2024 and sell it today you would lose (500.00) from holding Thomson Reuters Corp or give up 2.98% of portfolio value over 90 days.

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

Teleperformance PK  vs.  Thomson Reuters Corp

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 latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Thomson Reuters Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thomson Reuters Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Thomson Reuters is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Teleperformance and Thomson Reuters

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

The idea behind Teleperformance PK and Thomson Reuters Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.