Correlation Between Addtech AB and Teradata Corp
Can any of the company-specific risk be diversified away by investing in both Addtech AB and Teradata Corp 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 Addtech AB and Teradata Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Addtech AB and Teradata Corp, you can compare the effects of market volatilities on Addtech AB and Teradata Corp 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 Addtech AB with a short position of Teradata Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Addtech AB and Teradata Corp.
Diversification Opportunities for Addtech AB and Teradata Corp
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Addtech and Teradata is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Addtech AB and Teradata Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teradata Corp and Addtech AB 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 Addtech AB are associated (or correlated) with Teradata Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teradata Corp has no effect on the direction of Addtech AB i.e., Addtech AB and Teradata Corp go up and down completely randomly.
Pair Corralation between Addtech AB and Teradata Corp
Assuming the 90 days trading horizon Addtech AB is expected to under-perform the Teradata Corp. But the stock apears to be less risky and, when comparing its historical volatility, Addtech AB is 1.11 times less risky than Teradata Corp. The stock trades about -0.28 of its potential returns per unit of risk. The Teradata Corp is currently generating about -0.16 of returns per unit of risk over similar time horizon. If you would invest 3,140 in Teradata Corp on October 14, 2024 and sell it today you would lose (120.00) from holding Teradata Corp or give up 3.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Addtech AB vs. Teradata Corp
Performance |
| Timeline |
| Addtech AB |
| Teradata Corp |
Addtech AB and Teradata Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Addtech AB and Teradata Corp
The main advantage of trading using opposite Addtech AB and Teradata Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Addtech AB position performs unexpectedly, Teradata Corp 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 Teradata Corp will offset losses from the drop in Teradata Corp's long position.| Addtech AB vs. OPERA SOFTWARE | Addtech AB vs. MAGIC SOFTWARE ENTR | Addtech AB vs. DEVRY EDUCATION GRP | Addtech AB vs. Laureate Education |
| Teradata Corp vs. Agilent Technologies | Teradata Corp vs. Addtech AB | Teradata Corp vs. Easy Software AG | Teradata Corp vs. BioNTech SE |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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