Correlation Between Viemed Healthcare and Teradyne

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

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

Diversification Opportunities for Viemed Healthcare and Teradyne

-0.46

Correlation Coefficient

Viemed Healthcare  Teradyne

Very good diversification

The 3 months correlation between Viemed and Teradyne is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Viemed Healthcare and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Viemed Healthcare 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 Viemed Healthcare 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 Viemed Healthcare i.e., Viemed Healthcare and Teradyne go up and down completely randomly.

Pair Corralation between Viemed Healthcare and Teradyne

Considering the 90-day investment horizon Viemed Healthcare is expected to generate 12.71 times less return on investment than Teradyne. But when comparing it to its historical volatility, Viemed Healthcare is 1.27 times less risky than Teradyne. It trades about 0.01 of its potential returns per unit of risk. Teradyne is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  10,556  in Teradyne on October 9, 2024 and sell it today you would earn a total of  3,326  from holding Teradyne or generate 31.51% return on investment over 90 days.

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

Viemed Healthcare  vs.  Teradyne

Viemed Healthcare

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viemed Healthcare has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Viemed Healthcare is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Teradyne

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Teradyne are ranked lower than 4 (%) 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 Viemed Healthcare and Teradyne

The main advantage of trading using opposite Viemed Healthcare and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viemed Healthcare 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 Viemed Healthcare 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.