Correlation Between Desktop Metal and Vislink Technologies

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

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

Diversification Opportunities for Desktop Metal and Vislink Technologies

-0.12

Correlation Coefficient

Desktop Metal  Vislink Technologies

Good diversification

The 3 months correlation between Desktop and Vislink is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Desktop Metal and Vislink Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vislink Technologies and Desktop Metal 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 Desktop Metal are associated (or correlated) with Vislink Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vislink Technologies has no effect on the direction of Desktop Metal i.e., Desktop Metal and Vislink Technologies go up and down completely randomly.

Pair Corralation between Desktop Metal and Vislink Technologies

Allowing for the 90-day total investment horizon Desktop Metal is expected to generate 1.83 times more return on investment than Vislink Technologies. However, Desktop Metal is 1.83 times more volatile than Vislink Technologies. It trades about 0.14 of its potential returns per unit of risk. Vislink Technologies is currently generating about -0.1 per unit of risk. If you would invest  232.00  in Desktop Metal on December 28, 2024 and sell it today you would earn a total of  267.00  from holding Desktop Metal or generate 115.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.66%
Values	Daily Returns

Desktop Metal  vs.  Vislink Technologies

Desktop Metal

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Desktop Metal are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Desktop Metal displayed solid returns over the last few months and may actually be approaching a breakup point.

Vislink Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vislink Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in April 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Desktop Metal and Vislink Technologies

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

The idea behind Desktop Metal and Vislink Technologies 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.