Correlation Between Tekla Healthcare and Cahxx

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

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

Diversification Opportunities for Tekla Healthcare and Cahxx

0.59

Correlation Coefficient

Tekla Healthcare  Cahxx

Very weak diversification

The 3 months correlation between Tekla and Cahxx is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Opportunities and Cahxx in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cahxx and Tekla Healthcare 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 Tekla Healthcare Opportunities are associated (or correlated) with Cahxx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cahxx has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Cahxx go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Cahxx

Considering the 90-day investment horizon Tekla Healthcare Opportunities is expected to under-perform the Cahxx. But the fund apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Opportunities is 60.33 times less risky than Cahxx. The fund trades about -0.14 of its potential returns per unit of risk. The Cahxx is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  480.00  in Cahxx on September 30, 2024 and sell it today you would lose (380.00) from holding Cahxx or give up 79.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	97.67%
Values	Daily Returns

Tekla Healthcare Opportunities  vs.  Cahxx

Tekla Healthcare Opp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tekla Healthcare Opportunities has generated negative risk-adjusted returns adding no value to fund investors. Even with latest inconsistent performance, the Fund's technical indicators remain invariable and the latest agitation on Wall Street may also be a sign of long-running gains for the fund retail investors.

Cahxx

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Cahxx are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Cahxx showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tekla Healthcare and Cahxx

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

The idea behind Tekla Healthcare Opportunities and Cahxx 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.