Correlation Between CONMED and Si Bone
Can any of the company-specific risk be diversified away by investing in both CONMED and Si Bone 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 CONMED and Si Bone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CONMED and Si Bone, you can compare the effects of market volatilities on CONMED and Si Bone 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 CONMED with a short position of Si Bone. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONMED and Si Bone.
Diversification Opportunities for CONMED and Si Bone
Average diversification
The 3 months correlation between CONMED and SIBN is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and Si Bone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Si Bone and CONMED 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 CONMED are associated (or correlated) with Si Bone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Si Bone has no effect on the direction of CONMED i.e., CONMED and Si Bone go up and down completely randomly.
Pair Corralation between CONMED and Si Bone
Given the investment horizon of 90 days CONMED is expected to generate 55.78 times less return on investment than Si Bone. But when comparing it to its historical volatility, CONMED is 3.5 times less risky than Si Bone. It trades about 0.02 of its potential returns per unit of risk. Si Bone is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,316 in Si Bone on October 23, 2024 and sell it today you would earn a total of 413.00 from holding Si Bone or generate 31.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CONMED vs. Si Bone
Performance |
| Timeline |
| CONMED |
| Si Bone |
CONMED and Si Bone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CONMED and Si Bone
The main advantage of trading using opposite CONMED and Si Bone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CONMED position performs unexpectedly, Si Bone 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 Si Bone will offset losses from the drop in Si Bone's long position.The idea behind CONMED and Si Bone 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.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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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