Correlation Between Profound Medical and DarioHealth Corp

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

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

Diversification Opportunities for Profound Medical and DarioHealth Corp

-0.32

Correlation Coefficient

Profound Medical  DarioHealth Corp

Very good diversification

The 3 months correlation between Profound and DarioHealth is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Profound Medical Corp and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp and Profound Medical 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 Profound Medical Corp are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Profound Medical i.e., Profound Medical and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Profound Medical and DarioHealth Corp

Given the investment horizon of 90 days Profound Medical Corp is expected to under-perform the DarioHealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, Profound Medical Corp is 1.73 times less risky than DarioHealth Corp. The stock trades about -0.02 of its potential returns per unit of risk. The DarioHealth Corp is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  83.00  in DarioHealth Corp on September 3, 2024 and sell it today you would lose (4.00) from holding DarioHealth Corp or give up 4.82% of portfolio value over 90 days.

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

Profound Medical Corp  vs.  DarioHealth Corp

Profound Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Profound Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, DarioHealth Corp is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Profound Medical and DarioHealth Corp

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

The idea behind Profound Medical Corp and DarioHealth Corp 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.