Correlation Between Trio Tech and Teradyne

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

By analyzing existing cross correlation between Trio Tech International and Teradyne, you can compare the effects of market volatilities on Trio Tech and Teradyne 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 Trio Tech with a short position of Teradyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trio Tech and Teradyne.

Diversification Opportunities for Trio Tech and Teradyne

-0.47

Correlation Coefficient

Trio Tech  Teradyne

Very good diversification

The 3 months correlation between Trio and Teradyne is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Trio Tech International and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Trio Tech 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 Trio Tech International are associated (or correlated) with Teradyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradyne has no effect on the direction of Trio Tech i.e., Trio Tech and Teradyne go up and down completely randomly.

Pair Corralation between Trio Tech and Teradyne

Considering the 90-day investment horizon Trio Tech International is expected to under-perform the Teradyne. In addition to that, Trio Tech is 1.15 times more volatile than Teradyne. It trades about -0.07 of its total potential returns per unit of risk. Teradyne is currently generating about 0.08 per unit of volatility. If you would invest  12,522  in Teradyne on October 22, 2024 and sell it today you would earn a total of  1,318  from holding Teradyne or generate 10.53% return on investment over 90 days.

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

Trio Tech International  vs.  Teradyne

Trio Tech International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trio Tech International has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Teradyne

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak technical and fundamental indicators, Teradyne may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Trio Tech and Teradyne

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

The idea behind Trio Tech International and Teradyne 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.