Correlation Between SurModics and Tela Bio

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

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

Diversification Opportunities for SurModics and Tela Bio

0.19

Correlation Coefficient

SurModics  Tela Bio

Average diversification

The 3 months correlation between SurModics and Tela is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding SurModics and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and SurModics 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 SurModics are associated (or correlated) with Tela Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tela Bio has no effect on the direction of SurModics i.e., SurModics and Tela Bio go up and down completely randomly.

Pair Corralation between SurModics and Tela Bio

Given the investment horizon of 90 days SurModics is expected to generate 0.13 times more return on investment than Tela Bio. However, SurModics is 7.54 times less risky than Tela Bio. It trades about 0.37 of its potential returns per unit of risk. Tela Bio is currently generating about -0.06 per unit of risk. If you would invest  3,872  in SurModics on September 16, 2024 and sell it today you would earn a total of  131.00  from holding SurModics or generate 3.38% return on investment over 90 days.

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

SurModics  vs.  Tela Bio

SurModics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in SurModics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong fundamental indicators, SurModics is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Tela Bio

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tela Bio are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat conflicting essential indicators, Tela Bio sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SurModics and Tela Bio

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

The idea behind SurModics and Tela Bio 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.