Correlation Between Ebang International and Teradyne

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

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

Diversification Opportunities for Ebang International and Teradyne

-0.59

Correlation Coefficient

Ebang International  Teradyne

Excellent diversification

The 3 months correlation between Ebang and Teradyne is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Ebang International Holdings and Teradyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradyne and Ebang International 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 Ebang International Holdings 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 Ebang International i.e., Ebang International and Teradyne go up and down completely randomly.

Pair Corralation between Ebang International and Teradyne

Given the investment horizon of 90 days Ebang International Holdings is expected to generate 2.0 times more return on investment than Teradyne. However, Ebang International is 2.0 times more volatile than Teradyne. It trades about 0.1 of its potential returns per unit of risk. Teradyne is currently generating about -0.12 per unit of risk. If you would invest  575.00  in Ebang International Holdings on August 30, 2024 and sell it today you would earn a total of  170.00  from holding Ebang International Holdings or generate 29.57% return on investment over 90 days.

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

Ebang International Holdings  vs.  Teradyne

Ebang International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Ebang International Holdings are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Ebang International displayed solid returns over the last few months and may actually be approaching a breakup point.

Teradyne

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teradyne has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's technical and fundamental indicators remain relatively invariable which may send shares a bit higher in December 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Ebang International and Teradyne

The main advantage of trading using opposite Ebang International and Teradyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ebang International 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 Ebang International Holdings 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.