Correlation Between LENSAR and Biomerica

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

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

Diversification Opportunities for LENSAR and Biomerica

0.06

Correlation Coefficient

LENSAR  Biomerica

Significant diversification

The 3 months correlation between LENSAR and Biomerica is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and LENSAR 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 LENSAR Inc are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of LENSAR i.e., LENSAR and Biomerica go up and down completely randomly.

Pair Corralation between LENSAR and Biomerica

Given the investment horizon of 90 days LENSAR Inc is expected to generate 0.36 times more return on investment than Biomerica. However, LENSAR Inc is 2.76 times less risky than Biomerica. It trades about 0.08 of its potential returns per unit of risk. Biomerica is currently generating about -0.02 per unit of risk. If you would invest  738.00  in LENSAR Inc on September 23, 2024 and sell it today you would earn a total of  32.00  from holding LENSAR Inc or generate 4.34% return on investment over 90 days.

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

LENSAR Inc  vs.  Biomerica

LENSAR Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Biomerica

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerica are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Biomerica is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with LENSAR and Biomerica

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

The idea behind LENSAR Inc and Biomerica 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.