Correlation Between Teradyne and Alpha Technology
Can any of the company-specific risk be diversified away by investing in both Teradyne and Alpha Technology 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 Teradyne and Alpha Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teradyne and Alpha Technology Group, you can compare the effects of market volatilities on Teradyne and Alpha Technology 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 Teradyne with a short position of Alpha Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradyne and Alpha Technology.
Diversification Opportunities for Teradyne and Alpha Technology
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teradyne and Alpha is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Teradyne and Alpha Technology Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alpha Technology and Teradyne 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 Teradyne are associated (or correlated) with Alpha Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alpha Technology has no effect on the direction of Teradyne i.e., Teradyne and Alpha Technology go up and down completely randomly.
Pair Corralation between Teradyne and Alpha Technology
Considering the 90-day investment horizon Teradyne is expected to generate 3.01 times less return on investment than Alpha Technology. But when comparing it to its historical volatility, Teradyne is 4.3 times less risky than Alpha Technology. It trades about 0.05 of its potential returns per unit of risk. Alpha Technology Group is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,819 in Alpha Technology Group on September 14, 2024 and sell it today you would lose (1,076) from holding Alpha Technology Group or give up 38.17% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Teradyne vs. Alpha Technology Group
Performance |
Timeline |
Teradyne |
Alpha Technology |
Teradyne and Alpha Technology Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Teradyne and Alpha Technology
The main advantage of trading using opposite Teradyne and Alpha Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradyne position performs unexpectedly, Alpha Technology 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 Alpha Technology will offset losses from the drop in Alpha Technology's long position.Teradyne vs. IPG Photonics | Teradyne vs. Ultra Clean Holdings | Teradyne vs. Onto Innovation | Teradyne vs. Cohu Inc |
Alpha Technology vs. Assurant | Alpha Technology vs. Pekin Life Insurance | Alpha Technology vs. The Hanover Insurance | Alpha Technology vs. Teradyne |
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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