Correlation Between ATT and Tekla Healthcare

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

By analyzing existing cross correlation between ATT Inc and Tekla Healthcare Opportunities, you can compare the effects of market volatilities on ATT and Tekla Healthcare 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 ATT with a short position of Tekla Healthcare. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATT and Tekla Healthcare.

Diversification Opportunities for ATT and Tekla Healthcare

-0.64

Correlation Coefficient

ATT  Tekla Healthcare

Excellent diversification

The 3 months correlation between ATT and Tekla is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding ATT Inc and Tekla Healthcare Opportunities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tekla Healthcare Opp and ATT 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 ATT Inc are associated (or correlated) with Tekla Healthcare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tekla Healthcare Opp has no effect on the direction of ATT i.e., ATT and Tekla Healthcare go up and down completely randomly.

Pair Corralation between ATT and Tekla Healthcare

Taking into account the 90-day investment horizon ATT Inc is expected to generate 1.61 times more return on investment than Tekla Healthcare. However, ATT is 1.61 times more volatile than Tekla Healthcare Opportunities. It trades about 0.04 of its potential returns per unit of risk. Tekla Healthcare Opportunities is currently generating about 0.03 per unit of risk. If you would invest  1,731  in ATT Inc on October 5, 2024 and sell it today you would earn a total of  552.00  from holding ATT Inc or generate 31.89% return on investment over 90 days.

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

ATT Inc  vs.  Tekla Healthcare Opportunities

ATT Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in ATT Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, ATT may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with inconsistent performance in the last few months, the Fund's technical indicators remain relatively invariable which may send shares a bit higher in February 2025. The latest agitation may also be a sign of long-running up-swing for the fund retail investors.

Pair Trading with ATT and Tekla Healthcare

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

The idea behind ATT Inc and Tekla Healthcare Opportunities 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.