Correlation Between Tekla Healthcare and Alphacentric Lifesci

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

Diversification Opportunities for Tekla Healthcare and Alphacentric Lifesci

0.8

Correlation Coefficient

Tekla Healthcare  Alphacentric Lifesci

Very poor diversification

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

Pair Corralation between Tekla Healthcare and Alphacentric Lifesci

Assuming the 90 days horizon Tekla Healthcare Investors is expected to under-perform the Alphacentric Lifesci. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tekla Healthcare Investors is 1.29 times less risky than Alphacentric Lifesci. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Alphacentric Lifesci Healthcare is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,241  in Alphacentric Lifesci Healthcare on October 10, 2024 and sell it today you would earn a total of  36.00  from holding Alphacentric Lifesci Healthcare or generate 2.9% return on investment over 90 days.

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

Tekla Healthcare Investors  vs.  Alphacentric Lifesci Healthcar

Tekla Healthcare Inv

Risk-Adjusted Performance

0 of 100

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 latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Alphacentric Lifesci

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphacentric Lifesci Healthcare has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alphacentric Lifesci 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 Alphacentric Lifesci

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

The idea behind Tekla Healthcare Investors and Alphacentric Lifesci Healthcare 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.