Correlation Between Laboratory and Airsculpt Technologies

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Can any of the company-specific risk be diversified away by investing in both Laboratory and Airsculpt Technologies 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 Laboratory and Airsculpt Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Laboratory of and Airsculpt Technologies, you can compare the effects of market volatilities on Laboratory and Airsculpt Technologies 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 Laboratory with a short position of Airsculpt Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and Airsculpt Technologies.

Diversification Opportunities for Laboratory and Airsculpt Technologies

0.82
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Laboratory and Airsculpt is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Airsculpt Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Airsculpt Technologies and Laboratory 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 Laboratory of are associated (or correlated) with Airsculpt Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Airsculpt Technologies has no effect on the direction of Laboratory i.e., Laboratory and Airsculpt Technologies go up and down completely randomly.

Pair Corralation between Laboratory and Airsculpt Technologies

Allowing for the 90-day total investment horizon Laboratory is expected to generate 1.48 times less return on investment than Airsculpt Technologies. But when comparing it to its historical volatility, Laboratory of is 3.86 times less risky than Airsculpt Technologies. It trades about 0.06 of its potential returns per unit of risk. Airsculpt Technologies is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  558.00  in Airsculpt Technologies on September 24, 2024 and sell it today you would lose (23.00) from holding Airsculpt Technologies or give up 4.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Laboratory of  vs.  Airsculpt Technologies

 Performance 
       Timeline  
Laboratory 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly strong technical indicators, Laboratory is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.
Airsculpt Technologies 

Risk-Adjusted Performance

0 of 100

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

Laboratory and Airsculpt Technologies Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Laboratory and Airsculpt Technologies

The main advantage of trading using opposite Laboratory and Airsculpt Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Laboratory position performs unexpectedly, Airsculpt Technologies 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 Airsculpt Technologies will offset losses from the drop in Airsculpt Technologies' long position.
The idea behind Laboratory of and Airsculpt Technologies 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.

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