Correlation Between Varex Imaging and Precipio

Can any of the company-specific risk be diversified away by investing in both Varex Imaging and Precipio 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 Precipio 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 Precipio, you can compare the effects of market volatilities on Varex Imaging and Precipio 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 Precipio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Varex Imaging and Precipio.

Diversification Opportunities for Varex Imaging and Precipio

-0.7

Correlation Coefficient

Varex Imaging  Precipio

Excellent diversification

The 3 months correlation between Varex and Precipio is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Varex Imaging Corp and Precipio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Precipio 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 Precipio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Precipio has no effect on the direction of Varex Imaging i.e., Varex Imaging and Precipio go up and down completely randomly.

Pair Corralation between Varex Imaging and Precipio

Given the investment horizon of 90 days Varex Imaging Corp is expected to generate 1.26 times more return on investment than Precipio. However, Varex Imaging is 1.26 times more volatile than Precipio. It trades about 0.37 of its potential returns per unit of risk. Precipio is currently generating about -0.17 per unit of risk. If you would invest  1,331  in Varex Imaging Corp on August 30, 2024 and sell it today you would earn a total of  322.00  from holding Varex Imaging Corp or generate 24.19% return on investment over 90 days.

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

Varex Imaging Corp  vs.  Precipio

Varex Imaging Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Varex Imaging Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of fairly uncertain technical and fundamental indicators, Varex Imaging showed solid returns over the last few months and may actually be approaching a breakup point.

Precipio

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Precipio has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Pair Trading with Varex Imaging and Precipio

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

The idea behind Varex Imaging Corp and Precipio 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.