Correlation Between IRIDEX and LENSAR

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

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

Diversification Opportunities for IRIDEX and LENSAR

0.27

Correlation Coefficient

IRIDEX  LENSAR

Modest diversification

The 3 months correlation between IRIDEX and LENSAR is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding IRIDEX and LENSAR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LENSAR Inc and IRIDEX 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 IRIDEX are associated (or correlated) with LENSAR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LENSAR Inc has no effect on the direction of IRIDEX i.e., IRIDEX and LENSAR go up and down completely randomly.

Pair Corralation between IRIDEX and LENSAR

Given the investment horizon of 90 days IRIDEX is expected to under-perform the LENSAR. But the stock apears to be less risky and, when comparing its historical volatility, IRIDEX is 1.63 times less risky than LENSAR. The stock trades about -0.17 of its potential returns per unit of risk. The LENSAR Inc is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  467.00  in LENSAR Inc on June 29, 2024 and sell it today you would lose (26.00) from holding LENSAR Inc or give up 5.57% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

IRIDEX  vs.  LENSAR Inc

IRIDEX

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days IRIDEX has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

LENSAR Inc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in LENSAR Inc are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, LENSAR is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with IRIDEX and LENSAR

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

The idea behind IRIDEX and LENSAR Inc 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .