Correlation Between Laboratory and Apyx Medical

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

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

Diversification Opportunities for Laboratory and Apyx Medical

0.63

Correlation Coefficient

Laboratory  Apyx Medical

Poor diversification

The 3 months correlation between Laboratory and Apyx is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Apyx Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Apyx Medical and Laboratory 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 Laboratory of are associated (or correlated) with Apyx Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Apyx Medical has no effect on the direction of Laboratory i.e., Laboratory and Apyx Medical go up and down completely randomly.

Pair Corralation between Laboratory and Apyx Medical

Allowing for the 90-day total investment horizon Laboratory is expected to generate 5.19 times less return on investment than Apyx Medical. But when comparing it to its historical volatility, Laboratory of is 4.27 times less risky than Apyx Medical. It trades about 0.07 of its potential returns per unit of risk. Apyx Medical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  135.00  in Apyx Medical on August 31, 2024 and sell it today you would earn a total of  34.00  from holding Apyx Medical or generate 25.19% return on investment over 90 days.

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

Laboratory of  vs.  Apyx Medical

Laboratory

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Apyx Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Apyx Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Apyx Medical showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and Apyx Medical

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

The idea behind Laboratory of and Apyx Medical 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.