Correlation Between Tela Bio and Procept Biorobotics

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

By analyzing existing cross correlation between Tela Bio and Procept Biorobotics Corp, you can compare the effects of market volatilities on Tela Bio and Procept Biorobotics 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 Procept Biorobotics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tela Bio and Procept Biorobotics.

Diversification Opportunities for Tela Bio and Procept Biorobotics

0.8

Correlation Coefficient

Tela Bio  Procept Biorobotics

Very poor diversification

The 3 months correlation between Tela and Procept is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Tela Bio and Procept Biorobotics Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Procept Biorobotics Corp 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 Procept Biorobotics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Procept Biorobotics Corp has no effect on the direction of Tela Bio i.e., Tela Bio and Procept Biorobotics go up and down completely randomly.

Pair Corralation between Tela Bio and Procept Biorobotics

Given the investment horizon of 90 days Tela Bio is expected to generate 0.89 times more return on investment than Procept Biorobotics. However, Tela Bio is 1.12 times less risky than Procept Biorobotics. It trades about -0.11 of its potential returns per unit of risk. Procept Biorobotics Corp is currently generating about -0.2 per unit of risk. If you would invest  299.00  in Tela Bio on December 1, 2024 and sell it today you would lose (54.00) from holding Tela Bio or give up 18.06% of portfolio value over 90 days.

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

Tela Bio  vs.  Procept Biorobotics Corp

Tela Bio

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tela Bio has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's essential indicators remain somewhat 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.

Procept Biorobotics Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Procept Biorobotics Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Tela Bio and Procept Biorobotics

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

The idea behind Tela Bio and Procept Biorobotics Corp 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.