Correlation Between Weiss Korea and Teradata Corp

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

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

Diversification Opportunities for Weiss Korea and Teradata Corp

-0.3

Correlation Coefficient

Weiss Korea  Teradata Corp

Very good diversification

The 3 months correlation between Weiss and Teradata is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Weiss Korea Opportunity and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Weiss Korea 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 Weiss Korea Opportunity are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Weiss Korea i.e., Weiss Korea and Teradata Corp go up and down completely randomly.

Pair Corralation between Weiss Korea and Teradata Corp

Assuming the 90 days trading horizon Weiss Korea is expected to generate 3.61 times less return on investment than Teradata Corp. In addition to that, Weiss Korea is 1.07 times more volatile than Teradata Corp. It trades about 0.01 of its total potential returns per unit of risk. Teradata Corp is currently generating about 0.02 per unit of volatility. If you would invest  3,033  in Teradata Corp on October 6, 2024 and sell it today you would earn a total of  37.00  from holding Teradata Corp or generate 1.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.77%
Values	Daily Returns

Weiss Korea Opportunity  vs.  Teradata Corp

Weiss Korea Opportunity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Weiss Korea Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Weiss Korea is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Teradata Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Teradata Corp is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Weiss Korea and Teradata Corp

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

The idea behind Weiss Korea Opportunity and Teradata 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.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.