Correlation Between Heart Test and Senseonics Holdings

Can any of the company-specific risk be diversified away by investing in both Heart Test and Senseonics Holdings 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 Senseonics Holdings 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 Senseonics Holdings, you can compare the effects of market volatilities on Heart Test and Senseonics Holdings 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 Senseonics Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Heart Test and Senseonics Holdings.

Diversification Opportunities for Heart Test and Senseonics Holdings

0.28

Correlation Coefficient

Heart Test  Senseonics Holdings

Modest diversification

The 3 months correlation between Heart and Senseonics is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Heart Test Laboratories and Senseonics Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Senseonics Holdings 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 Senseonics Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Senseonics Holdings has no effect on the direction of Heart Test i.e., Heart Test and Senseonics Holdings go up and down completely randomly.

Pair Corralation between Heart Test and Senseonics Holdings

Given the investment horizon of 90 days Heart Test Laboratories is expected to generate 2.6 times more return on investment than Senseonics Holdings. However, Heart Test is 2.6 times more volatile than Senseonics Holdings. It trades about 0.0 of its potential returns per unit of risk. Senseonics Holdings is currently generating about -0.01 per unit of risk. If you would invest  8,550  in Heart Test Laboratories on October 5, 2024 and sell it today you would lose (8,176) from holding Heart Test Laboratories or give up 95.63% 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.  Senseonics Holdings

Heart Test Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heart Test Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable fundamental indicators, Heart Test is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Senseonics Holdings

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Senseonics Holdings are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Senseonics Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Heart Test and Senseonics Holdings

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

The idea behind Heart Test Laboratories and Senseonics Holdings 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.