Correlation Between Tekla Healthcare and Copeland Smid

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

By analyzing existing cross correlation between Tekla Healthcare Investors and Copeland Smid Cap, you can compare the effects of market volatilities on Tekla Healthcare and Copeland Smid 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 Copeland Smid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tekla Healthcare and Copeland Smid.

Diversification Opportunities for Tekla Healthcare and Copeland Smid

0.56

Correlation Coefficient

Tekla Healthcare  Copeland Smid

Very weak diversification

The 3 months correlation between Tekla and Copeland is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Tekla Healthcare Investors and Copeland Smid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copeland Smid Cap 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 Investors are associated (or correlated) with Copeland Smid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copeland Smid Cap has no effect on the direction of Tekla Healthcare i.e., Tekla Healthcare and Copeland Smid go up and down completely randomly.

Pair Corralation between Tekla Healthcare and Copeland Smid

Assuming the 90 days horizon Tekla Healthcare Investors is expected to generate 1.19 times more return on investment than Copeland Smid. However, Tekla Healthcare is 1.19 times more volatile than Copeland Smid Cap. It trades about -0.01 of its potential returns per unit of risk. Copeland Smid Cap is currently generating about -0.08 per unit of risk. If you would invest  1,860  in Tekla Healthcare Investors on December 21, 2024 and sell it today you would lose (18.00) from holding Tekla Healthcare Investors or give up 0.97% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Tekla Healthcare Investors  vs.  Copeland Smid Cap

Tekla Healthcare Inv

Risk-Adjusted Performance

Very Weak

Over the last 90 days Tekla Healthcare Investors has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical indicators, Tekla Healthcare is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Copeland Smid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Copeland Smid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Copeland Smid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Tekla Healthcare and Copeland Smid

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

The idea behind Tekla Healthcare Investors and Copeland Smid Cap 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.