Correlation Between DermTech and Vivani Medical

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

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

Diversification Opportunities for DermTech and Vivani Medical

-0.28

Correlation Coefficient

DermTech  Vivani Medical

Very good diversification

The 3 months correlation between DermTech and Vivani is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding DermTech and Vivani Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vivani Medical and DermTech 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 DermTech are associated (or correlated) with Vivani Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vivani Medical has no effect on the direction of DermTech i.e., DermTech and Vivani Medical go up and down completely randomly.

Pair Corralation between DermTech and Vivani Medical

Given the investment horizon of 90 days DermTech is expected to under-perform the Vivani Medical. But the stock apears to be less risky and, when comparing its historical volatility, DermTech is 6.43 times less risky than Vivani Medical. The stock trades about -0.19 of its potential returns per unit of risk. The Vivani Medical is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  105.00  in Vivani Medical on February 15, 2024 and sell it today you would earn a total of  78.00  from holding Vivani Medical or generate 74.29% return on investment over 90 days.

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

DermTech  vs.  Vivani Medical

DermTech

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DermTech has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in June 2024. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Vivani Medical

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vivani Medical are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite fairly fragile basic indicators, Vivani Medical demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with DermTech and Vivani Medical

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

The idea behind DermTech and Vivani Medical 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.