Correlation Between Team and TDCX
Can any of the company-specific risk be diversified away by investing in both Team and TDCX 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 Team and TDCX into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Team Inc and TDCX Inc ADR, you can compare the effects of market volatilities on Team and TDCX 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 Team with a short position of TDCX. Check out your portfolio center. Please also check ongoing floating volatility patterns of Team and TDCX.
Diversification Opportunities for Team and TDCX
Significant diversification
The 3 months correlation between Team and TDCX is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Team Inc and TDCX Inc ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDCX Inc ADR and Team 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 Team Inc are associated (or correlated) with TDCX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDCX Inc ADR has no effect on the direction of Team i.e., Team and TDCX go up and down completely randomly.
Pair Corralation between Team and TDCX
Given the investment horizon of 90 days Team Inc is expected to generate 3.59 times more return on investment than TDCX. However, Team is 3.59 times more volatile than TDCX Inc ADR. It trades about 0.09 of its potential returns per unit of risk. TDCX Inc ADR is currently generating about 0.09 per unit of risk. If you would invest 640.00 in Team Inc on November 3, 2024 and sell it today you would earn a total of 1,041 from holding Team Inc or generate 162.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 37.5% |
| Values | Daily Returns |
Team Inc vs. TDCX Inc ADR
Performance |
| Timeline |
| Team Inc |
| TDCX Inc ADR |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Team and TDCX Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Team and TDCX
The main advantage of trading using opposite Team and TDCX positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Team position performs unexpectedly, TDCX 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 TDCX will offset losses from the drop in TDCX's long position.The idea behind Team Inc and TDCX Inc ADR 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.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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