Correlation Between Establishment Labs and CVRx

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

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

Diversification Opportunities for Establishment Labs and CVRx

-0.53

Correlation Coefficient

Establishment Labs  CVRx

Excellent diversification

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

Pair Corralation between Establishment Labs and CVRx

Given the investment horizon of 90 days Establishment Labs Holdings is expected to under-perform the CVRx. In addition to that, Establishment Labs is 1.61 times more volatile than CVRx Inc. It trades about 0.0 of its total potential returns per unit of risk. CVRx Inc is currently generating about 0.01 per unit of volatility. If you would invest  1,277  in CVRx Inc on December 30, 2024 and sell it today you would lose (28.00) from holding CVRx Inc or give up 2.19% of portfolio value over 90 days.

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

Establishment Labs Holdings  vs.  CVRx Inc

Establishment Labs

Risk-Adjusted Performance

Very Weak

Over the last 90 days Establishment Labs Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Establishment Labs is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

CVRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CVRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Establishment Labs and CVRx

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

The idea behind Establishment Labs Holdings and CVRx Inc 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.