Correlation Between Heart Test and Tela Bio

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

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

Diversification Opportunities for Heart Test and Tela Bio

-0.33

Correlation Coefficient

Heart Test  Tela Bio

Very good diversification

The 3 months correlation between Heart and Tela is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and Heart Test 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 Heart Test Laboratories 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 Heart Test i.e., Heart Test and Tela Bio go up and down completely randomly.

Pair Corralation between Heart Test and Tela Bio

Given the investment horizon of 90 days Heart Test Laboratories is expected to generate 2.49 times more return on investment than Tela Bio. However, Heart Test is 2.49 times more volatile than Tela Bio. It trades about 0.12 of its potential returns per unit of risk. Tela Bio is currently generating about -0.01 per unit of risk. If you would invest  331.00  in Heart Test Laboratories on October 4, 2024 and sell it today you would earn a total of  51.00  from holding Heart Test Laboratories or generate 15.41% return on investment over 90 days.

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

Heart Test Laboratories  vs.  Tela Bio

Heart Test Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heart Test Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Heart Test is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tela Bio

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tela Bio are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain essential indicators, Tela Bio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Heart Test and Tela Bio

The main advantage of trading using opposite Heart Test and Tela Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Heart Test 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 Heart Test Laboratories 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.

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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.