Correlation Between BBB Foods and Telesis Bio

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

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

Diversification Opportunities for BBB Foods and Telesis Bio

-0.19

Correlation Coefficient

BBB Foods  Telesis Bio

Good diversification

The 3 months correlation between BBB and Telesis is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding BBB Foods and Telesis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesis Bio and BBB Foods 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 BBB Foods are associated (or correlated) with Telesis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesis Bio has no effect on the direction of BBB Foods i.e., BBB Foods and Telesis Bio go up and down completely randomly.

Pair Corralation between BBB Foods and Telesis Bio

Given the investment horizon of 90 days BBB Foods is expected to generate 1.42 times less return on investment than Telesis Bio. But when comparing it to its historical volatility, BBB Foods is 4.58 times less risky than Telesis Bio. It trades about 0.09 of its potential returns per unit of risk. Telesis Bio is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  715.00  in Telesis Bio on September 12, 2024 and sell it today you would lose (417.00) from holding Telesis Bio or give up 58.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.37%
Values	Daily Returns

BBB Foods  vs.  Telesis Bio

BBB Foods

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days BBB Foods has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental drivers, BBB Foods is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

Telesis Bio

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Telesis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain forward indicators, Telesis Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BBB Foods and Telesis Bio

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

The idea behind BBB Foods and Telesis 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.

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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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.