Correlation Between Telesis Bio and Community Health

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

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

Diversification Opportunities for Telesis Bio and Community Health

-0.71

Correlation Coefficient

Telesis Bio  Community Health

Pay attention - limited upside

The 3 months correlation between Telesis and Community is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Telesis Bio and Community Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Community Health Systems and Telesis 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 Telesis Bio are associated (or correlated) with Community Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Community Health Systems has no effect on the direction of Telesis Bio i.e., Telesis Bio and Community Health go up and down completely randomly.

Pair Corralation between Telesis Bio and Community Health

Given the investment horizon of 90 days Telesis Bio is expected to under-perform the Community Health. In addition to that, Telesis Bio is 2.06 times more volatile than Community Health Systems. It trades about -0.03 of its total potential returns per unit of risk. Community Health Systems is currently generating about 0.06 per unit of volatility. If you would invest  307.00  in Community Health Systems on March 13, 2024 and sell it today you would earn a total of  68.00  from holding Community Health Systems or generate 22.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.19%
Values	Daily Returns

Telesis Bio  vs.  Community Health Systems

Telesis Bio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Telesis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in July 2024. The recent disarray may also be a sign of long period up-swing for the firm investors.

Community Health Systems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Community Health Systems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite fairly unsteady basic indicators, Community Health demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Telesis Bio and Community Health

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

The idea behind Telesis Bio and Community Health Systems 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.