Correlation Between Spectral Med and Theratechnologies

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

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

Diversification Opportunities for Spectral Med and Theratechnologies

-0.16

Correlation Coefficient

Spectral Med  Theratechnologies

Good diversification

The 3 months correlation between Spectral and Theratechnologies is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Spectral Med and Theratechnologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theratechnologies and Spectral Med 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 Spectral Med are associated (or correlated) with Theratechnologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theratechnologies has no effect on the direction of Spectral Med i.e., Spectral Med and Theratechnologies go up and down completely randomly.

Pair Corralation between Spectral Med and Theratechnologies

Assuming the 90 days trading horizon Spectral Med is expected to generate 196.25 times less return on investment than Theratechnologies. But when comparing it to its historical volatility, Spectral Med is 2.2 times less risky than Theratechnologies. It trades about 0.0 of its potential returns per unit of risk. Theratechnologies is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  391.00  in Theratechnologies on April 24, 2025 and sell it today you would earn a total of  38.00  from holding Theratechnologies or generate 9.72% return on investment over 90 days.

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

Spectral Med  vs.  Theratechnologies

Spectral Med

Risk-Adjusted Performance

Weak

Over the last 90 days Spectral Med has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Spectral Med is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Theratechnologies

Risk-Adjusted Performance

Modest

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

Pair Trading with Spectral Med and Theratechnologies

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

The idea behind Spectral Med and Theratechnologies 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.