Correlation Between Pulmonx Corp and Treace Medical

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

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

Diversification Opportunities for Pulmonx Corp and Treace Medical

0.03

Correlation Coefficient

Pulmonx Corp  Treace Medical

Significant diversification

The 3 months correlation between Pulmonx and Treace is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Pulmonx Corp and Treace Medical Concepts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Treace Medical Concepts and Pulmonx Corp 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 Pulmonx Corp are associated (or correlated) with Treace Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Treace Medical Concepts has no effect on the direction of Pulmonx Corp i.e., Pulmonx Corp and Treace Medical go up and down completely randomly.

Pair Corralation between Pulmonx Corp and Treace Medical

Given the investment horizon of 90 days Pulmonx Corp is expected to under-perform the Treace Medical. In addition to that, Pulmonx Corp is 1.43 times more volatile than Treace Medical Concepts. It trades about -0.27 of its total potential returns per unit of risk. Treace Medical Concepts is currently generating about -0.14 per unit of volatility. If you would invest  913.00  in Treace Medical Concepts on December 29, 2024 and sell it today you would lose (76.00) from holding Treace Medical Concepts or give up 8.32% of portfolio value over 90 days.

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

Pulmonx Corp  vs.  Treace Medical Concepts

Pulmonx Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pulmonx Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Pulmonx Corp may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Treace Medical Concepts

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Treace Medical Concepts are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly uncertain fundamental indicators, Treace Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pulmonx Corp and Treace Medical

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

The idea behind Pulmonx Corp and Treace Medical Concepts 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.