Correlation Between Spectral and Tela Bio

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

By analyzing existing cross correlation between Spectral AI and Tela Bio, you can compare the effects of market volatilities on Spectral and Tela Bio 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 Spectral with a short position of Tela Bio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Spectral and Tela Bio.

Diversification Opportunities for Spectral and Tela Bio

-0.19

Correlation Coefficient

Spectral  Tela Bio

Good diversification

The 3 months correlation between Spectral and Tela is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Spectral AI and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and Spectral 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 Spectral AI are associated (or correlated) with Tela Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tela Bio has no effect on the direction of Spectral i.e., Spectral and Tela Bio go up and down completely randomly.

Pair Corralation between Spectral and Tela Bio

Given the investment horizon of 90 days Spectral AI is expected to under-perform the Tela Bio. But the stock apears to be less risky and, when comparing its historical volatility, Spectral AI is 1.04 times less risky than Tela Bio. The stock trades about -0.13 of its potential returns per unit of risk. The Tela Bio is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  536.00  in Tela Bio on March 29, 2024 and sell it today you would lose (17.00) from holding Tela Bio or give up 3.17% of portfolio value over 90 days.

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

Spectral AI  vs.  Tela Bio

Spectral AI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spectral AI has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in July 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Tela Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tela Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong essential indicators, Tela Bio is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Spectral and Tela Bio

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

The idea behind Spectral AI and Tela Bio 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.

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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.