Correlation Between SMC Corp and Teleperformance
Can any of the company-specific risk be diversified away by investing in both SMC Corp 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 SMC Corp and Teleperformance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SMC Corp and Teleperformance SE, you can compare the effects of market volatilities on SMC Corp 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 SMC Corp with a short position of Teleperformance. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Corp and Teleperformance.
Diversification Opportunities for SMC Corp and Teleperformance
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SMC and Teleperformance is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding SMC Corp and Teleperformance SE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleperformance SE and SMC 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 SMC Corp 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 SMC Corp i.e., SMC Corp and Teleperformance go up and down completely randomly.
Pair Corralation between SMC Corp and Teleperformance
Assuming the 90 days horizon SMC Corp is expected to generate 0.76 times more return on investment than Teleperformance. However, SMC Corp is 1.32 times less risky than Teleperformance. It trades about -0.04 of its potential returns per unit of risk. Teleperformance SE is currently generating about -0.04 per unit of risk. If you would invest 52,503 in SMC Corp on November 3, 2024 and sell it today you would lose (14,603) from holding SMC Corp or give up 27.81% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 89.07% |
| Values | Daily Returns |
SMC Corp vs. Teleperformance SE
Performance |
| Timeline |
| SMC Corp |
| Teleperformance SE |
SMC Corp and Teleperformance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SMC Corp and Teleperformance
The main advantage of trading using opposite SMC Corp and Teleperformance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SMC Corp 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.The idea behind SMC Corp and Teleperformance SE 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.| 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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