Correlation Between Doximity and Airsculpt Technologies

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

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

Diversification Opportunities for Doximity and Airsculpt Technologies

0.61

Correlation Coefficient

Doximity  Airsculpt Technologies

Poor diversification

The 3 months correlation between Doximity and Airsculpt is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Doximity and Airsculpt Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airsculpt Technologies and Doximity 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 Doximity are associated (or correlated) with Airsculpt Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airsculpt Technologies has no effect on the direction of Doximity i.e., Doximity and Airsculpt Technologies go up and down completely randomly.

Pair Corralation between Doximity and Airsculpt Technologies

Given the investment horizon of 90 days Doximity is expected to generate 0.59 times more return on investment than Airsculpt Technologies. However, Doximity is 1.69 times less risky than Airsculpt Technologies. It trades about 0.3 of its potential returns per unit of risk. Airsculpt Technologies is currently generating about -0.28 per unit of risk. If you would invest  4,875  in Doximity on September 24, 2024 and sell it today you would earn a total of  908.00  from holding Doximity or generate 18.63% return on investment over 90 days.

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

Doximity  vs.  Airsculpt Technologies

Doximity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Doximity are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain fundamental indicators, Doximity unveiled solid returns over the last few months and may actually be approaching a breakup point.

Airsculpt Technologies

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Doximity and Airsculpt Technologies

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

The idea behind Doximity and Airsculpt 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.

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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.