Correlation Between Modular Medical and Tenon Medical
Can any of the company-specific risk be diversified away by investing in both Modular Medical and Tenon 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 Modular Medical and Tenon Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Modular Medical and Tenon Medical, you can compare the effects of market volatilities on Modular Medical and Tenon 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 Modular Medical with a short position of Tenon Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Modular Medical and Tenon Medical.
Diversification Opportunities for Modular Medical and Tenon Medical
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Modular and Tenon is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Modular Medical and Tenon Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tenon Medical and Modular Medical 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 Modular Medical are associated (or correlated) with Tenon Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tenon Medical has no effect on the direction of Modular Medical i.e., Modular Medical and Tenon Medical go up and down completely randomly.
Pair Corralation between Modular Medical and Tenon Medical
Given the investment horizon of 90 days Modular Medical is expected to under-perform the Tenon Medical. But the stock apears to be less risky and, when comparing its historical volatility, Modular Medical is 1.92 times less risky than Tenon Medical. The stock trades about -0.43 of its potential returns per unit of risk. The Tenon Medical is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest 362.00 in Tenon Medical on August 27, 2024 and sell it today you would lose (110.00) from holding Tenon Medical or give up 30.39% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Modular Medical vs. Tenon Medical
Performance |
| Timeline |
| Modular Medical |
| Tenon Medical |
Modular Medical and Tenon Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Modular Medical and Tenon Medical
The main advantage of trading using opposite Modular Medical and Tenon Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Modular Medical position performs unexpectedly, Tenon 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 Tenon Medical will offset losses from the drop in Tenon Medical's long position.| Modular Medical vs. Neuropace | Modular Medical vs. Nexalin Technology | Modular Medical vs. STRATA Skin Sciences | Modular Medical vs. IRIDEX |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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