Correlation Between LENSAR and Profound Medical
Can any of the company-specific risk be diversified away by investing in both LENSAR and Profound Medical 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 Profound Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between LENSAR Inc and Profound Medical Corp, you can compare the effects of market volatilities on LENSAR and Profound Medical 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 Profound Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of LENSAR and Profound Medical.
Diversification Opportunities for LENSAR and Profound Medical
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between LENSAR and Profound is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding LENSAR Inc and Profound Medical Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Profound Medical Corp 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 Profound Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Profound Medical Corp has no effect on the direction of LENSAR i.e., LENSAR and Profound Medical go up and down completely randomly.
Pair Corralation between LENSAR and Profound Medical
Given the investment horizon of 90 days LENSAR Inc is expected to generate 1.2 times more return on investment than Profound Medical. However, LENSAR is 1.2 times more volatile than Profound Medical Corp. It trades about 0.27 of its potential returns per unit of risk. Profound Medical Corp is currently generating about 0.06 per unit of risk. If you would invest 560.00 in LENSAR Inc on August 24, 2024 and sell it today you would earn a total of 185.00 from holding LENSAR Inc or generate 33.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
LENSAR Inc vs. Profound Medical Corp
Performance |
| Timeline |
| LENSAR Inc |
| Profound Medical Corp |
LENSAR and Profound Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with LENSAR and Profound Medical
The main advantage of trading using opposite LENSAR and Profound Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if LENSAR position performs unexpectedly, Profound Medical 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 Profound Medical will offset losses from the drop in Profound Medical's long position.The idea behind LENSAR Inc and Profound Medical Corp 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.| Profound Medical vs. Si Bone | Profound Medical vs. Sight Sciences | Profound Medical vs. Nevro Corp | Profound Medical vs. Paragon 28 |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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