Correlation Between CochLear and Tivic Health

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

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

Diversification Opportunities for CochLear and Tivic Health

0.01

Correlation Coefficient

CochLear  Tivic Health

Significant diversification

The 3 months correlation between CochLear and Tivic is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding CochLear Ltd ADR and Tivic Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tivic Health Systems and CochLear 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 CochLear Ltd ADR are associated (or correlated) with Tivic Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tivic Health Systems has no effect on the direction of CochLear i.e., CochLear and Tivic Health go up and down completely randomly.

Pair Corralation between CochLear and Tivic Health

Assuming the 90 days horizon CochLear Ltd ADR is expected to under-perform the Tivic Health. But the pink sheet apears to be less risky and, when comparing its historical volatility, CochLear Ltd ADR is 11.28 times less risky than Tivic Health. The pink sheet trades about -0.04 of its potential returns per unit of risk. The Tivic Health Systems is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Tivic Health Systems on December 29, 2024 and sell it today you would lose (228.00) from holding Tivic Health Systems or give up 43.85% of portfolio value over 90 days.

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

CochLear Ltd ADR  vs.  Tivic Health Systems

CochLear ADR

Risk-Adjusted Performance

Very Weak

Over the last 90 days CochLear Ltd ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Tivic Health Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tivic Health Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Tivic Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CochLear and Tivic Health

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

The idea behind CochLear Ltd ADR and Tivic Health Systems 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.