Correlation Between Quipt Home and Tela Bio

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

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

Diversification Opportunities for Quipt Home and Tela Bio

0.51

Correlation Coefficient

Quipt Home  Tela Bio

Very weak diversification

The 3 months correlation between Quipt and Tela is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Quipt Home Medical and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and Quipt Home 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 Quipt Home Medical 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 Quipt Home i.e., Quipt Home and Tela Bio go up and down completely randomly.

Pair Corralation between Quipt Home and Tela Bio

Given the investment horizon of 90 days Quipt Home Medical is expected to generate 0.6 times more return on investment than Tela Bio. However, Quipt Home Medical is 1.66 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 -0.21 per unit of risk. If you would invest  260.00  in Quipt Home Medical on December 27, 2024 and sell it today you would lose (32.00) from holding Quipt Home Medical or give up 12.31% of portfolio value over 90 days.

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

Quipt Home Medical  vs.  Tela Bio

Quipt Home Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Quipt Home Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

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 April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Quipt Home and Tela Bio

The main advantage of trading using opposite Quipt Home and Tela Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Quipt Home 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 Quipt Home Medical 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 Stocks Directory module to find actively traded stocks across global markets.