Correlation Between Teladoc Health and Taiwan Semiconductor

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

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

Diversification Opportunities for Teladoc Health and Taiwan Semiconductor

0.64

Correlation Coefficient

Teladoc Health  Taiwan Semiconductor

Poor diversification

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

Pair Corralation between Teladoc Health and Taiwan Semiconductor

Assuming the 90 days trading horizon Teladoc Health is expected to generate 1.84 times more return on investment than Taiwan Semiconductor. However, Teladoc Health is 1.84 times more volatile than Taiwan Semiconductor Manufacturing. It trades about 0.13 of its potential returns per unit of risk. Taiwan Semiconductor Manufacturing is currently generating about 0.14 per unit of risk. If you would invest  150.00  in Teladoc Health on September 15, 2024 and sell it today you would earn a total of  57.00  from holding Teladoc Health or generate 38.0% return on investment over 90 days.

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

Teladoc Health  vs.  Taiwan Semiconductor Manufactu

Teladoc Health

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Teladoc Health are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental indicators, Teladoc Health sustained solid returns over the last few months and may actually be approaching a breakup point.

Taiwan Semiconductor

Risk-Adjusted Performance

10 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Taiwan Semiconductor Manufacturing are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak primary indicators, Taiwan Semiconductor sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Teladoc Health and Taiwan Semiconductor

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

The idea behind Teladoc Health and Taiwan Semiconductor Manufacturing 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.