Correlation Between Beyond Air and LivaNova PLC

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

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

Diversification Opportunities for Beyond Air and LivaNova PLC

-0.37

Correlation Coefficient

Beyond Air  LivaNova PLC

Very good diversification

The 3 months correlation between Beyond and LivaNova is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Beyond Air and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC and Beyond Air 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 Beyond Air are associated (or correlated) with LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of Beyond Air i.e., Beyond Air and LivaNova PLC go up and down completely randomly.

Pair Corralation between Beyond Air and LivaNova PLC

Given the investment horizon of 90 days Beyond Air is expected to generate 4.82 times more return on investment than LivaNova PLC. However, Beyond Air is 4.82 times more volatile than LivaNova PLC. It trades about 0.07 of its potential returns per unit of risk. LivaNova PLC is currently generating about -0.01 per unit of risk. If you would invest  40.00  in Beyond Air on September 18, 2024 and sell it today you would earn a total of  6.00  from holding Beyond Air or generate 15.0% return on investment over 90 days.

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

Beyond Air  vs.  LivaNova PLC

Beyond Air

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Beyond Air are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Even with relatively unsteady forward indicators, Beyond Air reported solid returns over the last few months and may actually be approaching a breakup point.

LivaNova PLC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Beyond Air and LivaNova PLC

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

The idea behind Beyond Air and LivaNova PLC 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.