Correlation Between LENSAR and Soho House

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

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

Diversification Opportunities for LENSAR and Soho House

0.49

Correlation Coefficient

LENSAR  Soho House

Very weak diversification

The 3 months correlation between LENSAR and Soho is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Soho House Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soho House 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 Soho House. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soho House has no effect on the direction of LENSAR i.e., LENSAR and Soho House go up and down completely randomly.

Pair Corralation between LENSAR and Soho House

Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.04 times more return on investment than Soho House. However, LENSAR is 1.04 times more volatile than Soho House Co. It trades about 0.07 of its potential returns per unit of risk. Soho House Co is currently generating about 0.04 per unit of risk. If you would invest  272.00  in LENSAR Inc on October 11, 2024 and sell it today you would earn a total of  563.00  from holding LENSAR Inc or generate 206.99% return on investment over 90 days.

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

LENSAR Inc  vs.  Soho House Co

LENSAR Inc

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 16 (%) 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.

Soho House

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Soho House Co are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very sluggish fundamental indicators, Soho House displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with LENSAR and Soho House

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

The idea behind LENSAR Inc and Soho House Co 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.