Correlation Between Intertek Group and Teleperformance

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

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

Diversification Opportunities for Intertek Group and Teleperformance

0.55

Correlation Coefficient

Intertek Group  Teleperformance

Very weak diversification

The 3 months correlation between Intertek and Teleperformance is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding Intertek Group Plc and Teleperformance PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance PK and Intertek Group 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 Intertek Group Plc are associated (or correlated) with Teleperformance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleperformance PK has no effect on the direction of Intertek Group i.e., Intertek Group and Teleperformance go up and down completely randomly.

Pair Corralation between Intertek Group and Teleperformance

Assuming the 90 days horizon Intertek Group Plc is expected to generate 0.64 times more return on investment than Teleperformance. However, Intertek Group Plc is 1.56 times less risky than Teleperformance. It trades about -0.06 of its potential returns per unit of risk. Teleperformance PK is currently generating about -0.07 per unit of risk. If you would invest  6,488  in Intertek Group Plc on September 3, 2024 and sell it today you would lose (426.00) from holding Intertek Group Plc or give up 6.57% of portfolio value over 90 days.

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

Intertek Group Plc  vs.  Teleperformance PK

Intertek Group Plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Intertek Group Plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Intertek Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Teleperformance PK

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance PK has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Intertek Group and Teleperformance

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

The idea behind Intertek Group Plc and Teleperformance PK 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.