Correlation Between Globus Medical and Pulmonx Corp

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

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

Diversification Opportunities for Globus Medical and Pulmonx Corp

-0.62

Correlation Coefficient

Globus Medical  Pulmonx Corp

Excellent diversification

The 3 months correlation between Globus and Pulmonx is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Globus Medical and Pulmonx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmonx Corp and Globus Medical 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 Globus Medical are associated (or correlated) with Pulmonx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmonx Corp has no effect on the direction of Globus Medical i.e., Globus Medical and Pulmonx Corp go up and down completely randomly.

Pair Corralation between Globus Medical and Pulmonx Corp

Given the investment horizon of 90 days Globus Medical is expected to under-perform the Pulmonx Corp. But the stock apears to be less risky and, when comparing its historical volatility, Globus Medical is 3.14 times less risky than Pulmonx Corp. The stock trades about -0.1 of its potential returns per unit of risk. The Pulmonx Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  671.00  in Pulmonx Corp on December 29, 2024 and sell it today you would earn a total of  8.00  from holding Pulmonx Corp or generate 1.19% return on investment over 90 days.

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

Globus Medical  vs.  Pulmonx Corp

Globus Medical

Risk-Adjusted Performance

Very Weak

Over the last 90 days Globus Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pulmonx Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmonx Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Pulmonx Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Globus Medical and Pulmonx Corp

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

The idea behind Globus Medical and Pulmonx Corp 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.