Correlation Between Quidel and Pulmonx Corp

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

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

Diversification Opportunities for Quidel and Pulmonx Corp

0.78

Correlation Coefficient

Quidel  Pulmonx Corp

Poor diversification

The 3 months correlation between Quidel and Pulmonx is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Quidel and Pulmonx Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pulmonx Corp and Quidel 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 Quidel are associated (or correlated) with Pulmonx Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pulmonx Corp has no effect on the direction of Quidel i.e., Quidel and Pulmonx Corp go up and down completely randomly.

Pair Corralation between Quidel and Pulmonx Corp

Given the investment horizon of 90 days Quidel is expected to generate 1.08 times more return on investment than Pulmonx Corp. However, Quidel is 1.08 times more volatile than Pulmonx Corp. It trades about 0.16 of its potential returns per unit of risk. Pulmonx Corp is currently generating about 0.04 per unit of risk. If you would invest  3,739  in Quidel on September 17, 2024 and sell it today you would earn a total of  396.00  from holding Quidel or generate 10.59% return on investment over 90 days.

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

Quidel  vs.  Pulmonx Corp

Quidel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Quidel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Quidel is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pulmonx Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pulmonx Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Quidel and Pulmonx Corp

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

The idea behind Quidel and Pulmonx 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.