Correlation Between Rapid Micro and Tenon Medical

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

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

Diversification Opportunities for Rapid Micro and Tenon Medical

-0.52

Correlation Coefficient

Rapid Micro  Tenon Medical

Excellent diversification

The 3 months correlation between Rapid and Tenon is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical and Rapid Micro 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 Rapid Micro Biosystems are associated (or correlated) with Tenon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenon Medical has no effect on the direction of Rapid Micro i.e., Rapid Micro and Tenon Medical go up and down completely randomly.

Pair Corralation between Rapid Micro and Tenon Medical

Given the investment horizon of 90 days Rapid Micro Biosystems is expected to generate 0.99 times more return on investment than Tenon Medical. However, Rapid Micro Biosystems is 1.01 times less risky than Tenon Medical. It trades about -0.03 of its potential returns per unit of risk. Tenon Medical is currently generating about -0.51 per unit of risk. If you would invest  110.00  in Rapid Micro Biosystems on September 2, 2024 and sell it today you would lose (5.00) from holding Rapid Micro Biosystems or give up 4.55% of portfolio value over 90 days.

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

Rapid Micro Biosystems  vs.  Tenon Medical

Rapid Micro Biosystems

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Tenon Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tenon Medical has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Tenon Medical is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Rapid Micro and Tenon Medical

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

The idea behind Rapid Micro Biosystems and Tenon Medical 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.