Correlation Between Teleperformance and Sodexo PK

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

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

Diversification Opportunities for Teleperformance and Sodexo PK

0.33

Correlation Coefficient

Teleperformance  Sodexo PK

Weak diversification

The 3 months correlation between Teleperformance and Sodexo is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Teleperformance SE and Sodexo PK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sodexo PK and Teleperformance 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 Teleperformance SE are associated (or correlated) with Sodexo PK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sodexo PK has no effect on the direction of Teleperformance i.e., Teleperformance and Sodexo PK go up and down completely randomly.

Pair Corralation between Teleperformance and Sodexo PK

Assuming the 90 days horizon Teleperformance SE is expected to under-perform the Sodexo PK. In addition to that, Teleperformance is 1.64 times more volatile than Sodexo PK. It trades about -0.15 of its total potential returns per unit of risk. Sodexo PK is currently generating about -0.04 per unit of volatility. If you would invest  1,698  in Sodexo PK on September 23, 2024 and sell it today you would lose (78.00) from holding Sodexo PK or give up 4.59% of portfolio value over 90 days.

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

Teleperformance SE  vs.  Sodexo PK

Teleperformance SE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teleperformance SE has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's technical and fundamental indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Sodexo PK

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Teleperformance and Sodexo PK

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

The idea behind Teleperformance SE and Sodexo 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.

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 Stocks Directory module to find actively traded stocks across global markets.