Correlation Between LENSAR and VS Media

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

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

Diversification Opportunities for LENSAR and VS Media

-0.49

Correlation Coefficient

LENSAR  VS Media

Very good diversification

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

Pair Corralation between LENSAR and VS Media

Given the investment horizon of 90 days LENSAR is expected to generate 2.53 times less return on investment than VS Media. But when comparing it to its historical volatility, LENSAR Inc is 2.07 times less risky than VS Media. It trades about 0.15 of its potential returns per unit of risk. VS Media Holdings is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  95.00  in VS Media Holdings on October 20, 2024 and sell it today you would earn a total of  25.00  from holding VS Media Holdings or generate 26.32% 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.  VS Media Holdings

LENSAR Inc

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 13 (%) 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.

VS Media Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VS Media Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's primary indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with LENSAR and VS Media

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

The idea behind LENSAR Inc and VS Media 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.