Correlation Between Ecolab and Telix Pharmaceuticals

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

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

Diversification Opportunities for Ecolab and Telix Pharmaceuticals

0.09

Correlation Coefficient

Ecolab  Telix Pharmaceuticals

Significant diversification

The 3 months correlation between Ecolab and Telix is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Ecolab Inc and Telix Pharmaceuticals Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telix Pharmaceuticals and Ecolab 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 Ecolab Inc are associated (or correlated) with Telix Pharmaceuticals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telix Pharmaceuticals has no effect on the direction of Ecolab i.e., Ecolab and Telix Pharmaceuticals go up and down completely randomly.

Pair Corralation between Ecolab and Telix Pharmaceuticals

Considering the 90-day investment horizon Ecolab Inc is expected to under-perform the Telix Pharmaceuticals. But the stock apears to be less risky and, when comparing its historical volatility, Ecolab Inc is 2.51 times less risky than Telix Pharmaceuticals. The stock trades about -0.1 of its potential returns per unit of risk. The Telix Pharmaceuticals Limited is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,515  in Telix Pharmaceuticals Limited on September 26, 2024 and sell it today you would earn a total of  73.00  from holding Telix Pharmaceuticals Limited or generate 4.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	44.44%
Values	Daily Returns

Ecolab Inc  vs.  Telix Pharmaceuticals Limited

Ecolab Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ecolab Inc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental indicators, Ecolab is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Telix Pharmaceuticals

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Telix Pharmaceuticals Limited are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile essential indicators, Telix Pharmaceuticals may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Ecolab and Telix Pharmaceuticals

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

The idea behind Ecolab Inc and Telix Pharmaceuticals Limited 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.