Correlation Between Laboratory and Catheter Precision

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

By analyzing existing cross correlation between Laboratory of and Catheter Precision, you can compare the effects of market volatilities on Laboratory and Catheter Precision 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 Catheter Precision. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Catheter Precision.

Diversification Opportunities for Laboratory and Catheter Precision

-0.13

Correlation Coefficient

Laboratory  Catheter Precision

Good diversification

The 3 months correlation between Laboratory and Catheter is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Catheter Precision in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catheter Precision 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 Catheter Precision. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catheter Precision has no effect on the direction of Laboratory i.e., Laboratory and Catheter Precision go up and down completely randomly.

Pair Corralation between Laboratory and Catheter Precision

Allowing for the 90-day total investment horizon Laboratory is expected to generate 6.75 times less return on investment than Catheter Precision. But when comparing it to its historical volatility, Laboratory of is 11.74 times less risky than Catheter Precision. It trades about 0.03 of its potential returns per unit of risk. Catheter Precision is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  46.00  in Catheter Precision on September 23, 2024 and sell it today you would lose (13.00) from holding Catheter Precision or give up 28.26% of portfolio value over 90 days.

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

Laboratory of  vs.  Catheter Precision

Laboratory

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 2 (%) 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 recent stock price confusion, may contribute to short-horizon losses for the traders.

Catheter Precision

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Catheter Precision are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite inconsistent basic indicators, Catheter Precision disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and Catheter Precision

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

The idea behind Laboratory of and Catheter Precision 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.