Correlation Between LENSAR and EnVVeno Medical

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

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

Diversification Opportunities for LENSAR and EnVVeno Medical

-0.5

Correlation Coefficient

LENSAR  EnVVeno Medical

Very good diversification

The 3 months correlation between LENSAR and EnVVeno is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and enVVeno Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on enVVeno Medical Corp 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 EnVVeno Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of enVVeno Medical Corp has no effect on the direction of LENSAR i.e., LENSAR and EnVVeno Medical go up and down completely randomly.

Pair Corralation between LENSAR and EnVVeno Medical

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.58 times more return on investment than EnVVeno Medical. However, LENSAR is 1.58 times more volatile than enVVeno Medical Corp. It trades about 0.16 of its potential returns per unit of risk. enVVeno Medical Corp is currently generating about -0.02 per unit of risk. If you would invest  866.00  in LENSAR Inc on December 29, 2024 and sell it today you would earn a total of  547.00  from holding LENSAR Inc or generate 63.16% return on investment over 90 days.

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

LENSAR Inc  vs.  enVVeno Medical Corp

LENSAR Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 12 (%) 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.

enVVeno Medical Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days enVVeno Medical Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, EnVVeno Medical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with LENSAR and EnVVeno Medical

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

The idea behind LENSAR Inc and enVVeno Medical Corp 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.