Correlation Between Penumbra and Telesis Bio

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

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

Diversification Opportunities for Penumbra and Telesis Bio

-0.61

Correlation Coefficient

Penumbra  Telesis Bio

Excellent diversification

The 3 months correlation between Penumbra and Telesis is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Penumbra and Telesis Bio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Telesis Bio and Penumbra 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 Penumbra are associated (or correlated) with Telesis Bio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Telesis Bio has no effect on the direction of Penumbra i.e., Penumbra and Telesis Bio go up and down completely randomly.

Pair Corralation between Penumbra and Telesis Bio

Considering the 90-day investment horizon Penumbra is expected to generate 21.14 times less return on investment than Telesis Bio. But when comparing it to its historical volatility, Penumbra is 15.76 times less risky than Telesis Bio. It trades about 0.15 of its potential returns per unit of risk. Telesis Bio is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  181.00  in Telesis Bio on September 12, 2024 and sell it today you would earn a total of  117.00  from holding Telesis Bio or generate 64.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	26.98%
Values	Daily Returns

Penumbra  vs.  Telesis Bio

Penumbra

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penumbra are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Penumbra displayed solid returns over the last few months and may actually be approaching a breakup point.

Telesis Bio

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Telesis Bio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very uncertain forward indicators, Telesis Bio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penumbra and Telesis Bio

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

The idea behind Penumbra and Telesis 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.