Correlation Between LENSAR and Co Diagnostics

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

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

Diversification Opportunities for LENSAR and Co Diagnostics

-0.74

Correlation Coefficient

LENSAR  Co Diagnostics

Pay attention - limited upside

The 3 months correlation between LENSAR and CODX is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Co Diagnostics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Co Diagnostics and LENSAR 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 LENSAR Inc are associated (or correlated) with Co Diagnostics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Co Diagnostics has no effect on the direction of LENSAR i.e., LENSAR and Co Diagnostics go up and down completely randomly.

Pair Corralation between LENSAR and Co Diagnostics

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.65 times more return on investment than Co Diagnostics. However, LENSAR is 1.65 times more volatile than Co Diagnostics. It trades about 0.19 of its potential returns per unit of risk. Co Diagnostics is currently generating about -0.16 per unit of risk. If you would invest  463.00  in LENSAR Inc on August 31, 2024 and sell it today you would earn a total of  306.00  from holding LENSAR Inc or generate 66.09% return on investment over 90 days.

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

LENSAR Inc  vs.  Co Diagnostics

LENSAR Inc

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.

Co Diagnostics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Co Diagnostics has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with LENSAR and Co Diagnostics

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

The idea behind LENSAR Inc and Co Diagnostics 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.