Correlation Between Neuropace and Myomo

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

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

Diversification Opportunities for Neuropace and Myomo

0.93

Correlation Coefficient

Neuropace  Myomo

Almost no diversification

The 3 months correlation between Neuropace and Myomo is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Neuropace and Myomo Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Myomo Inc and Neuropace 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 Neuropace are associated (or correlated) with Myomo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Myomo Inc has no effect on the direction of Neuropace i.e., Neuropace and Myomo go up and down completely randomly.

Pair Corralation between Neuropace and Myomo

Given the investment horizon of 90 days Neuropace is expected to generate 1.34 times more return on investment than Myomo. However, Neuropace is 1.34 times more volatile than Myomo Inc. It trades about 0.16 of its potential returns per unit of risk. Myomo Inc is currently generating about 0.19 per unit of risk. If you would invest  697.00  in Neuropace on September 16, 2024 and sell it today you would earn a total of  406.00  from holding Neuropace or generate 58.25% return on investment over 90 days.

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

Neuropace  vs.  Myomo Inc

Neuropace

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuropace are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather conflicting fundamental indicators, Neuropace exhibited solid returns over the last few months and may actually be approaching a breakup point.

Myomo Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Myomo Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting basic indicators, Myomo displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Neuropace and Myomo

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

The idea behind Neuropace and Myomo Inc 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.