Correlation Between Veracyte and Vivani Medical

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

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

Diversification Opportunities for Veracyte and Vivani Medical

0.69

Correlation Coefficient

Veracyte  Vivani Medical

Poor diversification

The 3 months correlation between Veracyte and Vivani is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Veracyte and Vivani Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivani Medical and Veracyte 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 Veracyte are associated (or correlated) with Vivani Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivani Medical has no effect on the direction of Veracyte i.e., Veracyte and Vivani Medical go up and down completely randomly.

Pair Corralation between Veracyte and Vivani Medical

Given the investment horizon of 90 days Veracyte is expected to generate 0.91 times more return on investment than Vivani Medical. However, Veracyte is 1.1 times less risky than Vivani Medical. It trades about 0.22 of its potential returns per unit of risk. Vivani Medical is currently generating about 0.04 per unit of risk. If you would invest  3,042  in Veracyte on September 12, 2024 and sell it today you would earn a total of  1,312  from holding Veracyte or generate 43.13% return on investment over 90 days.

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

Veracyte  vs.  Vivani Medical

Veracyte

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Veracyte are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak basic indicators, Veracyte unveiled solid returns over the last few months and may actually be approaching a breakup point.

Vivani Medical

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vivani Medical are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak basic indicators, Vivani Medical may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Veracyte and Vivani Medical

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

The idea behind Veracyte and Vivani 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.