Correlation Between Orthopediatrics Corp and Tela Bio

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

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

Diversification Opportunities for Orthopediatrics Corp and Tela Bio

-0.22

Correlation Coefficient

Orthopediatrics Corp  Tela Bio

Very good diversification

The 3 months correlation between Orthopediatrics and Tela is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Orthopediatrics Corp and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and Orthopediatrics 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 Orthopediatrics Corp 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 Orthopediatrics Corp i.e., Orthopediatrics Corp and Tela Bio go up and down completely randomly.

Pair Corralation between Orthopediatrics Corp and Tela Bio

Given the investment horizon of 90 days Orthopediatrics Corp is expected to generate 0.5 times more return on investment than Tela Bio. However, Orthopediatrics Corp is 2.01 times less risky than Tela Bio. It trades about 0.05 of its potential returns per unit of risk. Tela Bio is currently generating about -0.22 per unit of risk. If you would invest  2,318  in Orthopediatrics Corp on December 31, 2024 and sell it today you would earn a total of  156.00  from holding Orthopediatrics Corp or generate 6.73% return on investment over 90 days.

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

Orthopediatrics Corp  vs.  Tela Bio

Orthopediatrics Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Orthopediatrics Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Orthopediatrics Corp may actually be approaching a critical reversion point that can send shares even higher in May 2025.

Tela Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tela Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat strong which may send shares a bit higher in May 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Orthopediatrics Corp and Tela Bio

The main advantage of trading using opposite Orthopediatrics Corp and Tela Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orthopediatrics Corp 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 Orthopediatrics Corp 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.