Correlation Between Trinity Biotech and DarioHealth Corp

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

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

Diversification Opportunities for Trinity Biotech and DarioHealth Corp

0.17

Correlation Coefficient

Trinity Biotech  DarioHealth Corp

Average diversification

The 3 months correlation between Trinity and DarioHealth is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Trinity Biotech plc and DarioHealth Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DarioHealth Corp and Trinity Biotech 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 Trinity Biotech plc are associated (or correlated) with DarioHealth Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DarioHealth Corp has no effect on the direction of Trinity Biotech i.e., Trinity Biotech and DarioHealth Corp go up and down completely randomly.

Pair Corralation between Trinity Biotech and DarioHealth Corp

Given the investment horizon of 90 days Trinity Biotech plc is expected to under-perform the DarioHealth Corp. But the stock apears to be less risky and, when comparing its historical volatility, Trinity Biotech plc is 1.09 times less risky than DarioHealth Corp. The stock trades about 0.0 of its potential returns per unit of risk. The DarioHealth Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  79.00  in DarioHealth Corp on December 31, 2024 and sell it today you would lose (17.00) from holding DarioHealth Corp or give up 21.52% of portfolio value over 90 days.

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

Trinity Biotech plc  vs.  DarioHealth Corp

Trinity Biotech plc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Trinity Biotech plc has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong forward indicators, Trinity Biotech is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

DarioHealth Corp

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in DarioHealth Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, DarioHealth Corp displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trinity Biotech and DarioHealth Corp

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

The idea behind Trinity Biotech plc and DarioHealth 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.