Correlation Between ReWalk Robotics and Profound Medical

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

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

Diversification Opportunities for ReWalk Robotics and Profound Medical

0.22

Correlation Coefficient

ReWalk Robotics  Profound Medical

Modest diversification

The 3 months correlation between ReWalk and Profound is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding ReWalk Robotics and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp and ReWalk Robotics 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 ReWalk Robotics are associated (or correlated) with Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of ReWalk Robotics i.e., ReWalk Robotics and Profound Medical go up and down completely randomly.

Pair Corralation between ReWalk Robotics and Profound Medical

Given the investment horizon of 90 days ReWalk Robotics is expected to under-perform the Profound Medical. In addition to that, ReWalk Robotics is 1.28 times more volatile than Profound Medical Corp. It trades about -0.16 of its total potential returns per unit of risk. Profound Medical Corp is currently generating about -0.02 per unit of volatility. If you would invest  868.00  in Profound Medical Corp on September 2, 2024 and sell it today you would lose (56.00) from holding Profound Medical Corp or give up 6.45% of portfolio value over 90 days.

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

ReWalk Robotics  vs.  Profound Medical Corp

ReWalk Robotics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ReWalk Robotics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fragile performance in the last few months, the Stock's basic indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Profound Medical Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Profound Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Profound Medical is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with ReWalk Robotics and Profound Medical

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

The idea behind ReWalk Robotics and Profound Medical 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.