Correlation Between LeMaitre Vascular and InfuSystems Holdings

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

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

Diversification Opportunities for LeMaitre Vascular and InfuSystems Holdings

0.88

Correlation Coefficient

LeMaitre Vascular  InfuSystems Holdings

Very poor diversification

The 3 months correlation between LeMaitre and InfuSystems is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding LeMaitre Vascular and InfuSystems Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on InfuSystems Holdings and LeMaitre Vascular 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 LeMaitre Vascular are associated (or correlated) with InfuSystems Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of InfuSystems Holdings has no effect on the direction of LeMaitre Vascular i.e., LeMaitre Vascular and InfuSystems Holdings go up and down completely randomly.

Pair Corralation between LeMaitre Vascular and InfuSystems Holdings

Given the investment horizon of 90 days LeMaitre Vascular is expected to generate 1.99 times less return on investment than InfuSystems Holdings. But when comparing it to its historical volatility, LeMaitre Vascular is 2.29 times less risky than InfuSystems Holdings. It trades about 0.15 of its potential returns per unit of risk. InfuSystems Holdings is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  665.00  in InfuSystems Holdings on August 30, 2024 and sell it today you would earn a total of  221.00  from holding InfuSystems Holdings or generate 33.23% return on investment over 90 days.

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

LeMaitre Vascular  vs.  InfuSystems Holdings

LeMaitre Vascular

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LeMaitre Vascular are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, LeMaitre Vascular unveiled solid returns over the last few months and may actually be approaching a breakup point.

InfuSystems Holdings

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in InfuSystems Holdings are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady technical and fundamental indicators, InfuSystems Holdings unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LeMaitre Vascular and InfuSystems Holdings

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

The idea behind LeMaitre Vascular and InfuSystems Holdings 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.