Correlation Between Venus Concept and WORK Medical

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

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

Diversification Opportunities for Venus Concept and WORK Medical

-0.55

Correlation Coefficient

Venus Concept  WORK Medical

Excellent diversification

The 3 months correlation between Venus and WORK is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Venus Concept and WORK Medical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WORK Medical Technology and Venus Concept 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 Venus Concept are associated (or correlated) with WORK Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WORK Medical Technology has no effect on the direction of Venus Concept i.e., Venus Concept and WORK Medical go up and down completely randomly.

Pair Corralation between Venus Concept and WORK Medical

Given the investment horizon of 90 days Venus Concept is expected to generate 0.75 times more return on investment than WORK Medical. However, Venus Concept is 1.34 times less risky than WORK Medical. It trades about 0.14 of its potential returns per unit of risk. WORK Medical Technology is currently generating about -0.04 per unit of risk. If you would invest  31.00  in Venus Concept on September 16, 2024 and sell it today you would earn a total of  4.00  from holding Venus Concept or generate 12.9% return on investment over 90 days.

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

Venus Concept  vs.  WORK Medical Technology

Venus Concept

Risk-Adjusted Performance

0 of 100

Very Weak

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

WORK Medical Technology

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in WORK Medical Technology are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite quite unfluctuating basic indicators, WORK Medical disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Venus Concept and WORK Medical

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

The idea behind Venus Concept and WORK Medical Technology 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.