Correlation Between GPT and TERADATA

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

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

Diversification Opportunities for GPT and TERADATA

-0.43

Correlation Coefficient

GPT  TERADATA

Very good diversification

The 3 months correlation between GPT and TERADATA is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding GPT Group and TERADATA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TERADATA and GPT 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 GPT Group are associated (or correlated) with TERADATA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TERADATA has no effect on the direction of GPT i.e., GPT and TERADATA go up and down completely randomly.

Pair Corralation between GPT and TERADATA

Assuming the 90 days horizon GPT Group is expected to under-perform the TERADATA. In addition to that, GPT is 1.83 times more volatile than TERADATA. It trades about -0.06 of its total potential returns per unit of risk. TERADATA is currently generating about 0.25 per unit of volatility. If you would invest  2,500  in TERADATA on September 13, 2024 and sell it today you would earn a total of  560.00  from holding TERADATA or generate 22.4% return on investment over 90 days.

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

GPT Group  vs.  TERADATA

GPT Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days GPT Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

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.

Pair Trading with GPT and TERADATA

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

The idea behind GPT Group and TERADATA 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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.