Correlation Between Odyssey Group and Tela Bio

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

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

Diversification Opportunities for Odyssey Group and Tela Bio

-0.7

Correlation Coefficient

Odyssey Group  Tela Bio

Excellent diversification

The 3 months correlation between Odyssey and Tela is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Odyssey Group International and Tela Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tela Bio and Odyssey Group 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 Odyssey Group International 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 Odyssey Group i.e., Odyssey Group and Tela Bio go up and down completely randomly.

Pair Corralation between Odyssey Group and Tela Bio

Given the investment horizon of 90 days Odyssey Group International is expected to generate 3.59 times more return on investment than Tela Bio. However, Odyssey Group is 3.59 times more volatile than Tela Bio. It trades about 0.06 of its potential returns per unit of risk. Tela Bio is currently generating about 0.06 per unit of risk. If you would invest  3.20  in Odyssey Group International on September 16, 2024 and sell it today you would lose (0.20) from holding Odyssey Group International or give up 6.25% of portfolio value over 90 days.

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

Odyssey Group International  vs.  Tela Bio

Odyssey Group Intern

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Odyssey Group International are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Odyssey Group showed solid returns over the last few months and may actually be approaching a breakup point.

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 Odyssey Group and Tela Bio

The main advantage of trading using opposite Odyssey Group and Tela Bio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Odyssey Group 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 Odyssey Group International 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.

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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.