Correlation Between Ascendis Health and Telemasters Holdings

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

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

Diversification Opportunities for Ascendis Health and Telemasters Holdings

-0.26

Correlation Coefficient

Ascendis Health  Telemasters Holdings

Very good diversification

The 3 months correlation between Ascendis and Telemasters is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ascendis Health and Telemasters Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telemasters Holdings and Ascendis Health 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 Ascendis Health are associated (or correlated) with Telemasters Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telemasters Holdings has no effect on the direction of Ascendis Health i.e., Ascendis Health and Telemasters Holdings go up and down completely randomly.

Pair Corralation between Ascendis Health and Telemasters Holdings

Assuming the 90 days trading horizon Ascendis Health is expected to under-perform the Telemasters Holdings. In addition to that, Ascendis Health is 1.1 times more volatile than Telemasters Holdings. It trades about -0.01 of its total potential returns per unit of risk. Telemasters Holdings is currently generating about 0.16 per unit of volatility. If you would invest  10,000  in Telemasters Holdings on December 25, 2024 and sell it today you would earn a total of  3,700  from holding Telemasters Holdings or generate 37.0% return on investment over 90 days.

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

Ascendis Health  vs.  Telemasters Holdings

Ascendis Health

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ascendis Health has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Ascendis Health is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Telemasters Holdings

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Telemasters Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Telemasters Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ascendis Health and Telemasters Holdings

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

The idea behind Ascendis Health and Telemasters Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.