Correlation Between Tactile Systems and Teleflex Incorporated

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

By analyzing existing cross correlation between Tactile Systems Technology and Teleflex Incorporated, you can compare the effects of market volatilities on Tactile Systems and Teleflex Incorporated 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 Tactile Systems with a short position of Teleflex Incorporated. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tactile Systems and Teleflex Incorporated.

Diversification Opportunities for Tactile Systems and Teleflex Incorporated

0.88

Correlation Coefficient

Tactile Systems  Teleflex Incorporated

Very poor diversification

The 3 months correlation between Tactile and Teleflex is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Tactile Systems Technology and Teleflex Incorporated in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teleflex Incorporated and Tactile Systems 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 Tactile Systems Technology are associated (or correlated) with Teleflex Incorporated. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teleflex Incorporated has no effect on the direction of Tactile Systems i.e., Tactile Systems and Teleflex Incorporated go up and down completely randomly.

Pair Corralation between Tactile Systems and Teleflex Incorporated

Given the investment horizon of 90 days Tactile Systems Technology is expected to under-perform the Teleflex Incorporated. But the stock apears to be less risky and, when comparing its historical volatility, Tactile Systems Technology is 1.38 times less risky than Teleflex Incorporated. The stock trades about -0.19 of its potential returns per unit of risk. The Teleflex Incorporated is currently generating about -0.11 of returns per unit of risk over similar time horizon. If you would invest  17,661  in Teleflex Incorporated on December 29, 2024 and sell it today you would lose (3,724) from holding Teleflex Incorporated or give up 21.09% of portfolio value over 90 days.

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

Tactile Systems Technology  vs.  Teleflex Incorporated

Tactile Systems Tech

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tactile Systems Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Teleflex Incorporated

Risk-Adjusted Performance

Very Weak

Over the last 90 days Teleflex Incorporated has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's technical and fundamental indicators remain fairly 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 Tactile Systems and Teleflex Incorporated

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

The idea behind Tactile Systems Technology and Teleflex Incorporated 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.