Correlation Between TERADATA and CRRC

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

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

Diversification Opportunities for TERADATA and CRRC

0.75

Correlation Coefficient

TERADATA  CRRC

Poor diversification

The 3 months correlation between TERADATA and CRRC is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding TERADATA and CRRC Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CRRC Limited and TERADATA 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 TERADATA are associated (or correlated) with CRRC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CRRC Limited has no effect on the direction of TERADATA i.e., TERADATA and CRRC go up and down completely randomly.

Pair Corralation between TERADATA and CRRC

Assuming the 90 days trading horizon TERADATA is expected to generate 0.92 times more return on investment than CRRC. However, TERADATA is 1.09 times less risky than CRRC. It trades about 0.12 of its potential returns per unit of risk. CRRC Limited is currently generating about -0.02 per unit of risk. If you would invest  2,860  in TERADATA on September 13, 2024 and sell it today you would earn a total of  200.00  from holding TERADATA or generate 6.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	97.67%
Values	Daily Returns

TERADATA  vs.  CRRC Limited

TERADATA

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in TERADATA are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, TERADATA unveiled solid returns over the last few months and may actually be approaching a breakup point.

CRRC Limited

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CRRC Limited are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, CRRC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with TERADATA and CRRC

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

The idea behind TERADATA and CRRC Limited 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.