Correlation Between Varex Imaging and Nexalin Technology

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

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

Diversification Opportunities for Varex Imaging and Nexalin Technology

0.57

Correlation Coefficient

Varex Imaging  Nexalin Technology

Very weak diversification

The 3 months correlation between Varex and Nexalin is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Nexalin Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nexalin Technology and Varex Imaging 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 Varex Imaging Corp are associated (or correlated) with Nexalin Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nexalin Technology has no effect on the direction of Varex Imaging i.e., Varex Imaging and Nexalin Technology go up and down completely randomly.

Pair Corralation between Varex Imaging and Nexalin Technology

Given the investment horizon of 90 days Varex Imaging Corp is expected to under-perform the Nexalin Technology. But the stock apears to be less risky and, when comparing its historical volatility, Varex Imaging Corp is 5.7 times less risky than Nexalin Technology. The stock trades about -0.02 of its potential returns per unit of risk. The Nexalin Technology is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  38.00  in Nexalin Technology on December 20, 2024 and sell it today you would lose (20.00) from holding Nexalin Technology or give up 52.63% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	86.44%
Values	Daily Returns

Varex Imaging Corp  vs.  Nexalin Technology

Varex Imaging Corp

Risk-Adjusted Performance

Very Weak

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

Nexalin Technology

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Varex Imaging and Nexalin Technology

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

The idea behind Varex Imaging Corp and Nexalin Technology 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.