Correlation Between Laboratory and CVRx

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

By analyzing existing cross correlation between Laboratory of and CVRx Inc, you can compare the effects of market volatilities on Laboratory and CVRx 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 CVRx. Check out your portfolio center. Please also check ongoing floating volatility patterns of Laboratory and CVRx.

Diversification Opportunities for Laboratory and CVRx

0.1

Correlation Coefficient

Laboratory  CVRx

Average diversification

The 3 months correlation between Laboratory and CVRx is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and CVRx Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CVRx Inc 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 CVRx. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CVRx Inc has no effect on the direction of Laboratory i.e., Laboratory and CVRx go up and down completely randomly.

Pair Corralation between Laboratory and CVRx

Allowing for the 90-day total investment horizon Laboratory is expected to generate 1.47 times less return on investment than CVRx. But when comparing it to its historical volatility, Laboratory of is 3.32 times less risky than CVRx. It trades about 0.02 of its potential returns per unit of risk. CVRx Inc is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,277  in CVRx Inc on December 28, 2024 and sell it today you would lose (28.00) from holding CVRx Inc or give up 2.19% of portfolio value over 90 days.

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

Laboratory of  vs.  CVRx Inc

Laboratory

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 1 (%) 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 current stock price confusion, may contribute to short-horizon losses for the traders.

CVRx Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days CVRx Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, CVRx is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Laboratory and CVRx

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

The idea behind Laboratory of and CVRx 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.