Correlation Between Laboratory and Helius Medical

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

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

Diversification Opportunities for Laboratory and Helius Medical

-0.08

Correlation Coefficient

Laboratory  Helius Medical

Good diversification

The 3 months correlation between Laboratory and Helius is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Laboratory of and Helius Medical Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Helius Medical Techn 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 Helius Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Helius Medical Techn has no effect on the direction of Laboratory i.e., Laboratory and Helius Medical go up and down completely randomly.

Pair Corralation between Laboratory and Helius Medical

Allowing for the 90-day total investment horizon Laboratory of is expected to generate 0.15 times more return on investment than Helius Medical. However, Laboratory of is 6.59 times less risky than Helius Medical. It trades about 0.03 of its potential returns per unit of risk. Helius Medical Technologies is currently generating about -0.04 per unit of risk. If you would invest  20,957  in Laboratory of on September 23, 2024 and sell it today you would earn a total of  1,904  from holding Laboratory of or generate 9.09% return on investment over 90 days.

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

Laboratory of  vs.  Helius Medical Technologies

Laboratory

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Laboratory of are ranked lower than 2 (%) 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.

Helius Medical Techn

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Helius Medical Technologies are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively inconsistent fundamental indicators, Helius Medical unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Laboratory and Helius Medical

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

The idea behind Laboratory of and Helius Medical 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.

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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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.