Correlation Between DarioHealth Corp and Penumbra

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

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

Diversification Opportunities for DarioHealth Corp and Penumbra

-0.53

Correlation Coefficient

DarioHealth Corp  Penumbra

Excellent diversification

The 3 months correlation between DarioHealth and Penumbra is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding DarioHealth Corp and Penumbra in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penumbra and DarioHealth Corp 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 DarioHealth Corp are associated (or correlated) with Penumbra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penumbra has no effect on the direction of DarioHealth Corp i.e., DarioHealth Corp and Penumbra go up and down completely randomly.

Pair Corralation between DarioHealth Corp and Penumbra

Given the investment horizon of 90 days DarioHealth Corp is expected to under-perform the Penumbra. In addition to that, DarioHealth Corp is 4.22 times more volatile than Penumbra. It trades about -0.13 of its total potential returns per unit of risk. Penumbra is currently generating about 0.17 per unit of volatility. If you would invest  23,330  in Penumbra on September 2, 2024 and sell it today you would earn a total of  1,082  from holding Penumbra or generate 4.64% return on investment over 90 days.

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

DarioHealth Corp  vs.  Penumbra

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, DarioHealth Corp is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Penumbra

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with DarioHealth Corp and Penumbra

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

The idea behind DarioHealth Corp and Penumbra 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.