Correlation Between Bioventus and IRIDEX

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

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

Diversification Opportunities for Bioventus and IRIDEX

-0.36

Correlation Coefficient

Bioventus  IRIDEX

Very good diversification

The 3 months correlation between Bioventus and IRIDEX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Bioventus and IRIDEX in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IRIDEX and Bioventus 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 Bioventus are associated (or correlated) with IRIDEX. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IRIDEX has no effect on the direction of Bioventus i.e., Bioventus and IRIDEX go up and down completely randomly.

Pair Corralation between Bioventus and IRIDEX

Considering the 90-day investment horizon Bioventus is expected to generate 1.28 times more return on investment than IRIDEX. However, Bioventus is 1.28 times more volatile than IRIDEX. It trades about 0.08 of its potential returns per unit of risk. IRIDEX is currently generating about 0.01 per unit of risk. If you would invest  240.00  in Bioventus on October 7, 2024 and sell it today you would earn a total of  804.00  from holding Bioventus or generate 335.0% return on investment over 90 days.

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

Bioventus  vs.  IRIDEX

Bioventus

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bioventus has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Bioventus is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

IRIDEX

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in IRIDEX are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating forward indicators, IRIDEX showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bioventus and IRIDEX

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

The idea behind Bioventus and IRIDEX 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.