Correlation Between Teradata Corp and FIH Mobile

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

Diversification Opportunities for Teradata Corp and FIH Mobile

-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Teradata and FXCNF is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and FIH Mobile Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIH Mobile Limited 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 FIH Mobile. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIH Mobile Limited has no effect on the direction of Teradata Corp i.e., Teradata Corp and FIH Mobile go up and down completely randomly.

Pair Corralation between Teradata Corp and FIH Mobile

Considering the 90-day investment horizon Teradata Corp is expected to generate 0.93 times more return on investment than FIH Mobile. However, Teradata Corp is 1.08 times less risky than FIH Mobile. It trades about 0.04 of its potential returns per unit of risk. FIH Mobile Limited is currently generating about 0.02 per unit of risk. If you would invest  2,238  in Teradata Corp on September 7, 2022 and sell it today you would earn a total of  1,181  from holding Teradata Corp or generate 52.77% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Teradata Corp  vs.  FIH Mobile Limited

 Performance (%) 
       Timeline  
Teradata Corp 
Teradata Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting fundamental indicators, Teradata Corp may actually be approaching a critical reversion point that can send shares even higher in January 2023.

Teradata Price Channel

FIH Mobile Limited 
FXCNF Performance
0 of 100
Over the last 90 days FIH Mobile Limited has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2023. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

FXCNF Price Channel

Teradata Corp and FIH Mobile Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Teradata Corp and FIH Mobile

The main advantage of trading using opposite Teradata Corp and FIH Mobile positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, FIH Mobile 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 FIH Mobile will offset losses from the drop in FIH Mobile's long position.
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The idea behind Teradata Corp and FIH Mobile Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.

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