Correlation Between Tactile Systems and Treace Medical

Can any of the company-specific risk be diversified away by investing in both Tactile Systems and Treace Medical 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 Treace Medical 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 Treace Medical Concepts, you can compare the effects of market volatilities on Tactile Systems and Treace Medical 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 Treace Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tactile Systems and Treace Medical.

Diversification Opportunities for Tactile Systems and Treace Medical

-0.22

Correlation Coefficient

Tactile Systems  Treace Medical

Very good diversification

The 3 months correlation between Tactile and Treace is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Tactile Systems Technology and Treace Medical Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treace Medical Concepts 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 Treace Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treace Medical Concepts has no effect on the direction of Tactile Systems i.e., Tactile Systems and Treace Medical go up and down completely randomly.

Pair Corralation between Tactile Systems and Treace Medical

Given the investment horizon of 90 days Tactile Systems Technology is expected to under-perform the Treace Medical. But the stock apears to be less risky and, when comparing its historical volatility, Tactile Systems Technology is 1.74 times less risky than Treace Medical. The stock trades about -0.18 of its potential returns per unit of risk. The Treace Medical Concepts is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  878.00  in Treace Medical Concepts on December 1, 2024 and sell it today you would earn a total of  16.00  from holding Treace Medical Concepts or generate 1.82% return on investment over 90 days.

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

Tactile Systems Technology  vs.  Treace Medical Concepts

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.

Treace Medical Concepts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Treace Medical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tactile Systems and Treace Medical

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

The idea behind Tactile Systems Technology and Treace Medical Concepts 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.