Correlation Between Teradata Corp and Aurubis AG

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Can any of the company-specific risk be diversified away by investing in both Teradata Corp and Aurubis AG 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 Corp and Aurubis AG into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradata Corp and Aurubis AG ADR, you can compare the effects of market volatilities on Teradata Corp and Aurubis AG 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 Corp with a short position of Aurubis AG. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and Aurubis AG.

Diversification Opportunities for Teradata Corp and Aurubis AG

0.65
  Correlation Coefficient

Poor diversification

The 3 months correlation between Teradata and Aurubis is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and Aurubis AG ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aurubis AG ADR and Teradata Corp 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 Corp are associated (or correlated) with Aurubis AG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aurubis AG ADR has no effect on the direction of Teradata Corp i.e., Teradata Corp and Aurubis AG go up and down completely randomly.

Pair Corralation between Teradata Corp and Aurubis AG

Considering the 90-day investment horizon Teradata Corp is expected to generate 2.32 times less return on investment than Aurubis AG. But when comparing it to its historical volatility, Teradata Corp is 1.66 times less risky than Aurubis AG. It trades about 0.19 of its potential returns per unit of risk. Aurubis AG ADR is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest  3,210  in Aurubis AG ADR on September 8, 2022 and sell it today you would earn a total of  765.00  from holding Aurubis AG ADR or generate 23.83% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

Teradata Corp  vs.  Aurubis AG ADR

 Performance (%) 
       Timeline  
Teradata Corp 
Teradata Performance
4 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady fundamental indicators, Teradata Corp may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Teradata Price Channel

Aurubis AG ADR 
Aurubis Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Aurubis AG ADR are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady technical and fundamental indicators, Aurubis AG showed solid returns over the last few months and may actually be approaching a breakup point.

Aurubis Price Channel

Teradata Corp and Aurubis AG Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teradata Corp and Aurubis AG

The main advantage of trading using opposite Teradata Corp and Aurubis AG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, Aurubis AG 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 Aurubis AG will offset losses from the drop in Aurubis AG's long position.
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The idea behind Teradata Corp and Aurubis AG ADR 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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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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