Correlation Between IRIDEX and Tivic Health

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

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

Diversification Opportunities for IRIDEX and Tivic Health

0.26

Correlation Coefficient

IRIDEX  Tivic Health

Modest diversification

The 3 months correlation between IRIDEX and Tivic is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding IRIDEX and Tivic Health Systems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tivic Health Systems and IRIDEX 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 IRIDEX are associated (or correlated) with Tivic Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tivic Health Systems has no effect on the direction of IRIDEX i.e., IRIDEX and Tivic Health go up and down completely randomly.

Pair Corralation between IRIDEX and Tivic Health

Given the investment horizon of 90 days IRIDEX is expected to under-perform the Tivic Health. But the stock apears to be less risky and, when comparing its historical volatility, IRIDEX is 4.03 times less risky than Tivic Health. The stock trades about -0.11 of its potential returns per unit of risk. The Tivic Health Systems is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  520.00  in Tivic Health Systems on December 28, 2024 and sell it today you would lose (239.00) from holding Tivic Health Systems or give up 45.96% of portfolio value over 90 days.

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

IRIDEX  vs.  Tivic Health Systems

IRIDEX

Risk-Adjusted Performance

Very Weak

Over the last 90 days IRIDEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Tivic Health Systems

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tivic Health Systems are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain basic indicators, Tivic Health exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with IRIDEX and Tivic Health

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

The idea behind IRIDEX and Tivic Health Systems 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.