Correlation Between Tela Bio and Delcath Systems

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

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

Diversification Opportunities for Tela Bio and Delcath Systems

0.57

Correlation Coefficient

Tela Bio  Delcath Systems

Very weak diversification

The 3 months correlation between Tela and Delcath is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Tela Bio and Delcath Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Delcath Systems and Tela Bio 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 Tela Bio are associated (or correlated) with Delcath Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Delcath Systems has no effect on the direction of Tela Bio i.e., Tela Bio and Delcath Systems go up and down completely randomly.

Pair Corralation between Tela Bio and Delcath Systems

Given the investment horizon of 90 days Tela Bio is expected to under-perform the Delcath Systems. But the stock apears to be less risky and, when comparing its historical volatility, Tela Bio is 1.3 times less risky than Delcath Systems. The stock trades about -0.07 of its potential returns per unit of risk. The Delcath Systems is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  976.00  in Delcath Systems on September 23, 2024 and sell it today you would earn a total of  125.00  from holding Delcath Systems or generate 12.81% return on investment over 90 days.

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

Tela Bio  vs.  Delcath Systems

Tela Bio

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Tela Bio are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent essential indicators, Tela Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Delcath Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Delcath Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Delcath Systems demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tela Bio and Delcath Systems

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

The idea behind Tela Bio and Delcath Systems 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.