Correlation Between Outset Medical and Avinger

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

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

Diversification Opportunities for Outset Medical and Avinger

-0.55

Correlation Coefficient

Outset Medical  Avinger

Excellent diversification

The 3 months correlation between Outset and Avinger is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Outset Medical and Avinger in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Avinger and Outset Medical 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 Outset Medical are associated (or correlated) with Avinger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Avinger has no effect on the direction of Outset Medical i.e., Outset Medical and Avinger go up and down completely randomly.

Pair Corralation between Outset Medical and Avinger

Allowing for the 90-day total investment horizon Outset Medical is expected to generate 1.1 times more return on investment than Avinger. However, Outset Medical is 1.1 times more volatile than Avinger. It trades about 0.15 of its potential returns per unit of risk. Avinger is currently generating about -0.01 per unit of risk. If you would invest  53.00  in Outset Medical on August 31, 2024 and sell it today you would earn a total of  36.62  from holding Outset Medical or generate 69.09% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Outset Medical  vs.  Avinger

Outset Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Outset Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, Outset Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Avinger

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Avinger has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Avinger is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Outset Medical and Avinger

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

The idea behind Outset Medical and Avinger 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.