Correlation Between LivaNova PLC and Beyond Air

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

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

Diversification Opportunities for LivaNova PLC and Beyond Air

-0.32

Correlation Coefficient

LivaNova PLC  Beyond Air

Very good diversification

The 3 months correlation between LivaNova and Beyond is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding LivaNova PLC and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air and LivaNova PLC 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 LivaNova PLC are associated (or correlated) with Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of LivaNova PLC i.e., LivaNova PLC and Beyond Air go up and down completely randomly.

Pair Corralation between LivaNova PLC and Beyond Air

Given the investment horizon of 90 days LivaNova PLC is expected to generate 0.36 times more return on investment than Beyond Air. However, LivaNova PLC is 2.8 times less risky than Beyond Air. It trades about 0.02 of its potential returns per unit of risk. Beyond Air is currently generating about -0.05 per unit of risk. If you would invest  4,799  in LivaNova PLC on September 17, 2024 and sell it today you would earn a total of  351.00  from holding LivaNova PLC or generate 7.31% return on investment over 90 days.

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

LivaNova PLC  vs.  Beyond Air

LivaNova PLC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LivaNova PLC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, LivaNova PLC is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Beyond Air

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LivaNova PLC and Beyond Air

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

The idea behind LivaNova PLC and Beyond Air 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.