Correlation Between Polen Us and Tekla Life

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

By analyzing existing cross correlation between Polen Small Pany and Tekla Life Sciences, you can compare the effects of market volatilities on Polen Us and Tekla Life 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 Polen Us with a short position of Tekla Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Polen Us and Tekla Life.

Diversification Opportunities for Polen Us and Tekla Life

-0.22

Correlation Coefficient

Polen Us  Tekla Life

Very good diversification

The 3 months correlation between Polen and Tekla is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Polen Small Pany and Tekla Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Life Sciences and Polen Us 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 Polen Small Pany are associated (or correlated) with Tekla Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Life Sciences has no effect on the direction of Polen Us i.e., Polen Us and Tekla Life go up and down completely randomly.

Pair Corralation between Polen Us and Tekla Life

Assuming the 90 days horizon Polen Small Pany is expected to generate 1.03 times more return on investment than Tekla Life. However, Polen Us is 1.03 times more volatile than Tekla Life Sciences. It trades about 0.11 of its potential returns per unit of risk. Tekla Life Sciences is currently generating about -0.07 per unit of risk. If you would invest  1,455  in Polen Small Pany on October 26, 2024 and sell it today you would earn a total of  131.00  from holding Polen Small Pany or generate 9.0% return on investment over 90 days.

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

Polen Small Pany  vs.  Tekla Life Sciences

Polen Small Pany

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Polen Small Pany are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Polen Us may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tekla Life Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Life Sciences has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Tekla Life is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Polen Us and Tekla Life

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

The idea behind Polen Small Pany and Tekla Life Sciences 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.