Correlation Between Venus Concept and Tenon Medical

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

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

Diversification Opportunities for Venus Concept and Tenon Medical

0.61

Correlation Coefficient

Venus Concept  Tenon Medical

Poor diversification

The 3 months correlation between Venus and Tenon is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Venus Concept and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical 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 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 Venus Concept i.e., Venus Concept and Tenon Medical go up and down completely randomly.

Pair Corralation between Venus Concept and Tenon Medical

Given the investment horizon of 90 days Venus Concept is expected to generate 0.78 times more return on investment than Tenon Medical. However, Venus Concept is 1.28 times less risky than Tenon Medical. It trades about -0.02 of its potential returns per unit of risk. Tenon Medical is currently generating about -0.03 per unit of risk. If you would invest  465.00  in Venus Concept on September 2, 2024 and sell it today you would lose (433.00) from holding Venus Concept or give up 93.12% of portfolio value over 90 days.

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

Venus Concept  vs.  Tenon Medical

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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 Venus Concept and Tenon Medical

The main advantage of trading using opposite Venus Concept and Tenon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Venus Concept 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 Venus Concept 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.