Correlation Between Volitionrx and Semler Scientific

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

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

Diversification Opportunities for Volitionrx and Semler Scientific

-0.27

Correlation Coefficient

Volitionrx  Semler Scientific

Very good diversification

The 3 months correlation between Volitionrx and Semler is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Volitionrx and Semler Scientific in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Semler Scientific and Volitionrx 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 Volitionrx are associated (or correlated) with Semler Scientific. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Semler Scientific has no effect on the direction of Volitionrx i.e., Volitionrx and Semler Scientific go up and down completely randomly.

Pair Corralation between Volitionrx and Semler Scientific

Given the investment horizon of 90 days Volitionrx is expected to under-perform the Semler Scientific. But the stock apears to be less risky and, when comparing its historical volatility, Volitionrx is 1.42 times less risky than Semler Scientific. The stock trades about -0.01 of its potential returns per unit of risk. The Semler Scientific is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  2,766  in Semler Scientific on October 24, 2024 and sell it today you would earn a total of  3,445  from holding Semler Scientific or generate 124.55% return on investment over 90 days.

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

Volitionrx  vs.  Semler Scientific

Volitionrx

Risk-Adjusted Performance

0 of 100

Very Weak

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

Semler Scientific

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Semler Scientific are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak essential indicators, Semler Scientific reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Volitionrx and Semler Scientific

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

The idea behind Volitionrx and Semler Scientific 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.