Correlation Between Nephros and Guided Therapeutics
Can any of the company-specific risk be diversified away by investing in both Nephros and Guided Therapeutics 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 Nephros and Guided Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nephros and Guided Therapeutics, you can compare the effects of market volatilities on Nephros and Guided Therapeutics 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 Nephros with a short position of Guided Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nephros and Guided Therapeutics.
Diversification Opportunities for Nephros and Guided Therapeutics
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nephros and Guided is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nephros and Guided Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guided Therapeutics and Nephros 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 Nephros are associated (or correlated) with Guided Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Guided Therapeutics has no effect on the direction of Nephros i.e., Nephros and Guided Therapeutics go up and down completely randomly.
Pair Corralation between Nephros and Guided Therapeutics
Given the investment horizon of 90 days Nephros is expected to generate 8.7 times less return on investment than Guided Therapeutics. But when comparing it to its historical volatility, Nephros is 3.48 times less risky than Guided Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Guided Therapeutics is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Guided Therapeutics on November 28, 2024 and sell it today you would lose (16.00) from holding Guided Therapeutics or give up 59.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.79% |
| Values | Daily Returns |
Nephros vs. Guided Therapeutics
Performance |
| Timeline |
| Nephros |
| Guided Therapeutics |
Nephros and Guided Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nephros and Guided Therapeutics
The main advantage of trading using opposite Nephros and Guided Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nephros position performs unexpectedly, Guided Therapeutics 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 Guided Therapeutics will offset losses from the drop in Guided Therapeutics' long position.| Nephros vs. Precision Optics, | Nephros vs. Repro Med Systems | Nephros vs. InfuSystems Holdings | Nephros vs. Utah Medical Products |
| Guided Therapeutics vs. Modular Medical | Guided Therapeutics vs. Neuropace | Guided Therapeutics vs. Nexalin Technology | Guided Therapeutics vs. STRATA Skin Sciences |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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