Correlation Between Alpha Tau and LivaNova PLC

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

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

Diversification Opportunities for Alpha Tau and LivaNova PLC

0.66

Correlation Coefficient

Alpha Tau  LivaNova PLC

Poor diversification

The 3 months correlation between Alpha and LivaNova is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Tau Medical and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC and Alpha Tau 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 Alpha Tau Medical are associated (or correlated) with LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Alpha Tau i.e., Alpha Tau and LivaNova PLC go up and down completely randomly.

Pair Corralation between Alpha Tau and LivaNova PLC

Given the investment horizon of 90 days Alpha Tau Medical is expected to generate 1.45 times more return on investment than LivaNova PLC. However, Alpha Tau is 1.45 times more volatile than LivaNova PLC. It trades about -0.05 of its potential returns per unit of risk. LivaNova PLC is currently generating about -0.09 per unit of risk. If you would invest  308.00  in Alpha Tau Medical on December 22, 2024 and sell it today you would lose (47.00) from holding Alpha Tau Medical or give up 15.26% of portfolio value over 90 days.

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

Alpha Tau Medical  vs.  LivaNova PLC

Alpha Tau Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alpha Tau Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

LivaNova PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days LivaNova PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alpha Tau and LivaNova PLC

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

The idea behind Alpha Tau Medical and LivaNova PLC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..