Correlation Between Heart Test and LENSAR

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

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

Diversification Opportunities for Heart Test and LENSAR

0.32

Correlation Coefficient

Heart Test  LENSAR

Weak diversification

The 3 months correlation between Heart and LENSAR is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and Heart Test 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 Heart Test Laboratories are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of Heart Test i.e., Heart Test and LENSAR go up and down completely randomly.

Pair Corralation between Heart Test and LENSAR

Given the investment horizon of 90 days Heart Test Laboratories is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, Heart Test Laboratories is 1.03 times less risky than LENSAR. The stock trades about -0.1 of its potential returns per unit of risk. The LENSAR Inc is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest  865.00  in LENSAR Inc on October 23, 2024 and sell it today you would lose (33.00) from holding LENSAR Inc or give up 3.82% of portfolio value over 90 days.

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

Heart Test Laboratories  vs.  LENSAR Inc

Heart Test Laboratories

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Heart Test Laboratories are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady fundamental indicators, Heart Test may actually be approaching a critical reversion point that can send shares even higher in February 2025.

LENSAR Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heart Test and LENSAR

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

The idea behind Heart Test Laboratories and LENSAR 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.

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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.