Correlation Between DarioHealth Corp and Establishment Labs

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

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

Diversification Opportunities for DarioHealth Corp and Establishment Labs

-0.19

Correlation Coefficient

DarioHealth Corp  Establishment Labs

Good diversification

The 3 months correlation between DarioHealth and Establishment is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding DarioHealth Corp and Establishment Labs Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Establishment Labs and DarioHealth Corp 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 DarioHealth Corp are associated (or correlated) with Establishment Labs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Establishment Labs has no effect on the direction of DarioHealth Corp i.e., DarioHealth Corp and Establishment Labs go up and down completely randomly.

Pair Corralation between DarioHealth Corp and Establishment Labs

Given the investment horizon of 90 days DarioHealth Corp is expected to under-perform the Establishment Labs. In addition to that, DarioHealth Corp is 1.51 times more volatile than Establishment Labs Holdings. It trades about -0.03 of its total potential returns per unit of risk. Establishment Labs Holdings is currently generating about 0.0 per unit of volatility. If you would invest  6,672  in Establishment Labs Holdings on March 2, 2024 and sell it today you would lose (1,512) from holding Establishment Labs Holdings or give up 22.66% of portfolio value over 90 days.

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

DarioHealth Corp  vs.  Establishment Labs Holdings

DarioHealth Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days DarioHealth Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Establishment Labs

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Establishment Labs Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Establishment Labs may actually be approaching a critical reversion point that can send shares even higher in July 2024.

Pair Trading with DarioHealth Corp and Establishment Labs

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

The idea behind DarioHealth Corp and Establishment Labs Holdings 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.