Correlation Between Establishment Labs and Beyond Air

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

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

Diversification Opportunities for Establishment Labs and Beyond Air

-0.61

Correlation Coefficient

Establishment Labs  Beyond Air

Excellent diversification

The 3 months correlation between Establishment and Beyond is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Establishment Labs Holdings and Beyond Air in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beyond Air and Establishment Labs 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 Establishment Labs Holdings are associated (or correlated) with Beyond Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beyond Air has no effect on the direction of Establishment Labs i.e., Establishment Labs and Beyond Air go up and down completely randomly.

Pair Corralation between Establishment Labs and Beyond Air

Given the investment horizon of 90 days Establishment Labs Holdings is expected to generate 0.62 times more return on investment than Beyond Air. However, Establishment Labs Holdings is 1.6 times less risky than Beyond Air. It trades about 0.01 of its potential returns per unit of risk. Beyond Air is currently generating about -0.16 per unit of risk. If you would invest  5,419  in Establishment Labs Holdings on February 8, 2024 and sell it today you would lose (25.00) from holding Establishment Labs Holdings or give up 0.46% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Establishment Labs Holdings  vs.  Beyond Air

Establishment Labs

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Establishment Labs Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unsteady basic indicators, Establishment Labs sustained solid returns over the last few months and may actually be approaching a breakup point.

Beyond Air

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Beyond Air has generated negative risk-adjusted returns adding no value to investors with long positions. Even with unsteady performance in the last few months, the Stock's forward indicators remain relatively invariable which may send shares a bit higher in June 2024. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Pair Trading with Establishment Labs and Beyond Air

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

The idea behind Establishment Labs Holdings and Beyond Air 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.