Correlation Between LENSAR and HealthCare

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Can any of the company-specific risk be diversified away by investing in both LENSAR and HealthCare 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 LENSAR and HealthCare into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LENSAR Inc and HealthCare, you can compare the effects of market volatilities on LENSAR and HealthCare 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 LENSAR with a short position of HealthCare. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and HealthCare.

Diversification Opportunities for LENSAR and HealthCare

LENSARHealthCareDiversified AwayLENSARHealthCareDiversified Away100%
0.52
  Correlation Coefficient

Very weak diversification

The 3 months correlation between LENSAR and HealthCare is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and HealthCare in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HealthCare and LENSAR 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 LENSAR Inc are associated (or correlated) with HealthCare. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HealthCare has no effect on the direction of LENSAR i.e., LENSAR and HealthCare go up and down completely randomly.

Pair Corralation between LENSAR and HealthCare

Given the investment horizon of 90 days LENSAR is expected to generate 5.16 times less return on investment than HealthCare. But when comparing it to its historical volatility, LENSAR Inc is 8.48 times less risky than HealthCare. It trades about 0.14 of its potential returns per unit of risk. HealthCare is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,448  in HealthCare on November 24, 2024 and sell it today you would lose (914.00) from holding HealthCare or give up 63.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy57.56%
ValuesDaily Returns

LENSAR Inc  vs.  HealthCare

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50050
JavaScript chart by amCharts 3.21.15LNSR HLTC
       Timeline  
LENSAR Inc 

Risk-Adjusted Performance

Good

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Even with relatively uncertain basic indicators, LENSAR reported solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb789101112
HealthCare 

Risk-Adjusted Performance

OK

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in HealthCare are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating basic indicators, HealthCare exhibited solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb2345678

LENSAR and HealthCare Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-12.87-9.64-6.41-3.180.05393.366.7310.1413.5616.98 0.0050.0100.0150.020
JavaScript chart by amCharts 3.21.15LNSR HLTC
       Returns  

Pair Trading with LENSAR and HealthCare

The main advantage of trading using opposite LENSAR and HealthCare positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR position performs unexpectedly, HealthCare 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 HealthCare will offset losses from the drop in HealthCare's long position.
The idea behind LENSAR Inc and HealthCare 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.

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