Correlation Between Rapid Micro and Vapotherm

Can any of the company-specific risk be diversified away by investing in both Rapid Micro and Vapotherm 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 Vapotherm 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 Vapotherm, you can compare the effects of market volatilities on Rapid Micro and Vapotherm 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 Vapotherm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rapid Micro and Vapotherm.

Diversification Opportunities for Rapid Micro and Vapotherm

0.0

Correlation Coefficient

Rapid Micro  Vapotherm

Pay attention - limited upside

The 3 months correlation between Rapid and Vapotherm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Rapid Micro Biosystems and Vapotherm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vapotherm 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 Vapotherm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vapotherm has no effect on the direction of Rapid Micro i.e., Rapid Micro and Vapotherm go up and down completely randomly.

Pair Corralation between Rapid Micro and Vapotherm

If you would invest  90.00  in Rapid Micro Biosystems on December 20, 2024 and sell it today you would earn a total of  140.00  from holding Rapid Micro Biosystems or generate 155.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Rapid Micro Biosystems  vs.  Vapotherm

Rapid Micro Biosystems

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Rapid Micro Biosystems are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak forward indicators, Rapid Micro exhibited solid returns over the last few months and may actually be approaching a breakup point.

Vapotherm

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Rapid Micro and Vapotherm

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

The idea behind Rapid Micro Biosystems and Vapotherm 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.