Correlation Between Biomerica and LENSAR

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

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

Diversification Opportunities for Biomerica and LENSAR

-0.13

Correlation Coefficient

Biomerica  LENSAR

Good diversification

The 3 months correlation between Biomerica and LENSAR is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Biomerica and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Biomerica 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 Biomerica are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Biomerica i.e., Biomerica and LENSAR go up and down completely randomly.

Pair Corralation between Biomerica and LENSAR

Given the investment horizon of 90 days Biomerica is expected to generate 1.7 times more return on investment than LENSAR. However, Biomerica is 1.7 times more volatile than LENSAR Inc. It trades about 0.14 of its potential returns per unit of risk. LENSAR Inc is currently generating about 0.17 per unit of risk. If you would invest  31.00  in Biomerica on October 10, 2024 and sell it today you would earn a total of  5.00  from holding Biomerica or generate 16.13% return on investment over 90 days.

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

Biomerica  vs.  LENSAR Inc

Biomerica

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Biomerica are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Biomerica sustained solid returns over the last few months and may actually be approaching a breakup point.

LENSAR Inc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Biomerica and LENSAR

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

The idea behind Biomerica and LENSAR 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.

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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 Commodity Directory module to find actively traded commodities issued by global exchanges.