Correlation Between Tema Neuroscience and Health Care

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

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

Diversification Opportunities for Tema Neuroscience and Health Care

0.28

Correlation Coefficient

Tema Neuroscience  Health Care

Modest diversification

The 3 months correlation between Tema and Health is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Tema Neuroscience and and Health Care Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Health Care Select and Tema Neuroscience 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 Tema Neuroscience and are associated (or correlated) with Health Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Health Care Select has no effect on the direction of Tema Neuroscience i.e., Tema Neuroscience and Health Care go up and down completely randomly.

Pair Corralation between Tema Neuroscience and Health Care

Given the investment horizon of 90 days Tema Neuroscience and is expected to under-perform the Health Care. In addition to that, Tema Neuroscience is 1.44 times more volatile than Health Care Select. It trades about -0.03 of its total potential returns per unit of risk. Health Care Select is currently generating about 0.13 per unit of volatility. If you would invest  13,671  in Health Care Select on December 28, 2024 and sell it today you would earn a total of  826.00  from holding Health Care Select or generate 6.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Tema Neuroscience and  vs.  Health Care Select

Tema Neuroscience

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tema Neuroscience and has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent basic indicators, Tema Neuroscience is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Health Care Select

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Health Care Select are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak essential indicators, Health Care may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tema Neuroscience and Health Care

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

The idea behind Tema Neuroscience and and Health Care Select 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 Anywhere module to track or share privately all of your investments from the convenience of any device.