Correlation Between Sodexo PK and Teleperformance
Can any of the company-specific risk be diversified away by investing in both Sodexo PK 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 Sodexo PK and Teleperformance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sodexo PK and Teleperformance SE, you can compare the effects of market volatilities on Sodexo PK 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 Sodexo PK with a short position of Teleperformance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sodexo PK and Teleperformance.
Diversification Opportunities for Sodexo PK and Teleperformance
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sodexo and Teleperformance is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Sodexo PK and Teleperformance SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance SE and Sodexo PK 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 Sodexo PK 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 SE has no effect on the direction of Sodexo PK i.e., Sodexo PK and Teleperformance go up and down completely randomly.
Pair Corralation between Sodexo PK and Teleperformance
Assuming the 90 days horizon Sodexo PK is expected to under-perform the Teleperformance. But the pink sheet apears to be less risky and, when comparing its historical volatility, Sodexo PK is 1.21 times less risky than Teleperformance. The pink sheet trades about -0.37 of its potential returns per unit of risk. The Teleperformance SE is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 8,350 in Teleperformance SE on October 23, 2024 and sell it today you would earn a total of 630.00 from holding Teleperformance SE or generate 7.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sodexo PK vs. Teleperformance SE
Performance |
| Timeline |
| Sodexo PK |
| Teleperformance SE |
Sodexo PK and Teleperformance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sodexo PK and Teleperformance
The main advantage of trading using opposite Sodexo PK and Teleperformance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sodexo PK 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.| Sodexo PK vs. Alfa Laval AB | Sodexo PK vs. Randstad Holdings NV | Sodexo PK vs. Sandvik AB ADR | Sodexo PK vs. Sonova Holding AG |
| Teleperformance vs. Teleperformance PK | Teleperformance vs. SMC Corp | Teleperformance vs. Schindler Holding AG | Teleperformance vs. Straumann Holding AG |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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