Correlation Between Venus Concept and CareCloud

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

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

Diversification Opportunities for Venus Concept and CareCloud

-0.6

Correlation Coefficient

Venus Concept  CareCloud

Excellent diversification

The 3 months correlation between Venus and CareCloud is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Venus Concept and CareCloud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CareCloud and Venus Concept 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 Venus Concept are associated (or correlated) with CareCloud. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CareCloud has no effect on the direction of Venus Concept i.e., Venus Concept and CareCloud go up and down completely randomly.

Pair Corralation between Venus Concept and CareCloud

Given the investment horizon of 90 days Venus Concept is expected to under-perform the CareCloud. In addition to that, Venus Concept is 2.76 times more volatile than CareCloud. It trades about 0.0 of its total potential returns per unit of risk. CareCloud is currently generating about 0.16 per unit of volatility. If you would invest  1,216  in CareCloud on September 12, 2024 and sell it today you would earn a total of  608.00  from holding CareCloud or generate 50.0% return on investment over 90 days.

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

Venus Concept  vs.  CareCloud

Venus Concept

Risk-Adjusted Performance

0 of 100

Very Weak

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

CareCloud

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CareCloud are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Even with relatively unfluctuating fundamental indicators, CareCloud reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Venus Concept and CareCloud

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

The idea behind Venus Concept and CareCloud 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.