Correlation Between CVRx and Rapid Micro
Can any of the company-specific risk be diversified away by investing in both CVRx and Rapid Micro 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 CVRx and Rapid Micro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CVRx Inc and Rapid Micro Biosystems, you can compare the effects of market volatilities on CVRx and Rapid Micro 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 CVRx with a short position of Rapid Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVRx and Rapid Micro.
Diversification Opportunities for CVRx and Rapid Micro
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between CVRx and Rapid is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding CVRx Inc and Rapid Micro Biosystems in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rapid Micro Biosystems and CVRx 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 CVRx Inc are associated (or correlated) with Rapid Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rapid Micro Biosystems has no effect on the direction of CVRx i.e., CVRx and Rapid Micro go up and down completely randomly.
Pair Corralation between CVRx and Rapid Micro
Given the investment horizon of 90 days CVRx Inc is expected to under-perform the Rapid Micro. But the stock apears to be less risky and, when comparing its historical volatility, CVRx Inc is 3.4 times less risky than Rapid Micro. The stock trades about -0.36 of its potential returns per unit of risk. The Rapid Micro Biosystems is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 296.00 in Rapid Micro Biosystems on December 9, 2024 and sell it today you would lose (57.00) from holding Rapid Micro Biosystems or give up 19.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CVRx Inc vs. Rapid Micro Biosystems
Performance |
| Timeline |
| CVRx Inc |
| Rapid Micro Biosystems |
CVRx and Rapid Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CVRx and Rapid Micro
The main advantage of trading using opposite CVRx and Rapid Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVRx position performs unexpectedly, Rapid Micro 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 Rapid Micro will offset losses from the drop in Rapid Micro's long position.The idea behind CVRx Inc and Rapid Micro Biosystems 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.| Rapid Micro vs. Rxsight | ||
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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