Correlation Between Pulmonx Corp and Biomerica

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

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

Diversification Opportunities for Pulmonx Corp and Biomerica

0.17

Correlation Coefficient

Pulmonx Corp  Biomerica

Average diversification

The 3 months correlation between Pulmonx and Biomerica is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pulmonx Corp and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and Pulmonx Corp 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 Pulmonx Corp 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 Pulmonx Corp i.e., Pulmonx Corp and Biomerica go up and down completely randomly.

Pair Corralation between Pulmonx Corp and Biomerica

Given the investment horizon of 90 days Pulmonx Corp is expected to under-perform the Biomerica. But the stock apears to be less risky and, when comparing its historical volatility, Pulmonx Corp is 1.61 times less risky than Biomerica. The stock trades about -0.09 of its potential returns per unit of risk. The Biomerica is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  30.00  in Biomerica on September 22, 2024 and sell it today you would lose (2.00) from holding Biomerica or give up 6.67% of portfolio value over 90 days.

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

Pulmonx Corp  vs.  Biomerica

Pulmonx Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pulmonx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

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 Pulmonx Corp and Biomerica

The main advantage of trading using opposite Pulmonx Corp and Biomerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pulmonx Corp 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 Pulmonx Corp 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.