Correlation Between Teradata Corp and DATATEC

Can any of the company-specific risk be diversified away by investing in both Teradata Corp and DATATEC 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 Teradata Corp and DATATEC into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teradata Corp and DATATEC LTD 2, you can compare the effects of market volatilities on Teradata Corp and DATATEC 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 Teradata Corp with a short position of DATATEC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teradata Corp and DATATEC.

Diversification Opportunities for Teradata Corp and DATATEC

0.44

Correlation Coefficient

Teradata Corp  DATATEC

Very weak diversification

The 3 months correlation between Teradata and DATATEC is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Teradata Corp and DATATEC LTD 2 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DATATEC LTD 2 and Teradata 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 Teradata Corp are associated (or correlated) with DATATEC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DATATEC LTD 2 has no effect on the direction of Teradata Corp i.e., Teradata Corp and DATATEC go up and down completely randomly.

Pair Corralation between Teradata Corp and DATATEC

Assuming the 90 days horizon Teradata Corp is expected to generate 1.76 times less return on investment than DATATEC. In addition to that, Teradata Corp is 1.23 times more volatile than DATATEC LTD 2. It trades about 0.08 of its total potential returns per unit of risk. DATATEC LTD 2 is currently generating about 0.17 per unit of volatility. If you would invest  493.00  in DATATEC LTD 2 on April 21, 2025 and sell it today you would earn a total of  92.00  from holding DATATEC LTD 2 or generate 18.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Teradata Corp  vs.  DATATEC LTD 2

Teradata Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Teradata Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Teradata Corp may actually be approaching a critical reversion point that can send shares even higher in August 2025.

DATATEC LTD 2

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DATATEC LTD 2 are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, DATATEC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teradata Corp and DATATEC

The main advantage of trading using opposite Teradata Corp and DATATEC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teradata Corp position performs unexpectedly, DATATEC 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 DATATEC will offset losses from the drop in DATATEC's long position.

The idea behind Teradata Corp and DATATEC LTD 2 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.