Correlation Between Smith Nephew and Pressure Biosciences
Can any of the company-specific risk be diversified away by investing in both Smith Nephew and Pressure Biosciences 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 Smith Nephew and Pressure Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smith Nephew SNATS and Pressure Biosciences, you can compare the effects of market volatilities on Smith Nephew and Pressure Biosciences 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 Smith Nephew with a short position of Pressure Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smith Nephew and Pressure Biosciences.
Diversification Opportunities for Smith Nephew and Pressure Biosciences
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Smith and Pressure is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Smith Nephew SNATS and Pressure Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Biosciences and Smith Nephew 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 Smith Nephew SNATS are associated (or correlated) with Pressure Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Biosciences has no effect on the direction of Smith Nephew i.e., Smith Nephew and Pressure Biosciences go up and down completely randomly.
Pair Corralation between Smith Nephew and Pressure Biosciences
If you would invest 2,524 in Smith Nephew SNATS on September 2, 2024 and sell it today you would earn a total of 54.00 from holding Smith Nephew SNATS or generate 2.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 4.76% |
| Values | Daily Returns |
Smith Nephew SNATS vs. Pressure Biosciences
Performance |
| Timeline |
| Smith Nephew SNATS |
| Pressure Biosciences |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Smith Nephew and Pressure Biosciences Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smith Nephew and Pressure Biosciences
The main advantage of trading using opposite Smith Nephew and Pressure Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smith Nephew position performs unexpectedly, Pressure Biosciences 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 Pressure Biosciences will offset losses from the drop in Pressure Biosciences' long position.| Smith Nephew vs. CochLear Ltd ADR | Smith Nephew vs. Integer Holdings Corp | Smith Nephew vs. Orthofix Medical | Smith Nephew vs. Glaukos Corp |
| Pressure Biosciences vs. ImmuCell | Pressure Biosciences vs. Pro Dex | Pressure Biosciences vs. SANUWAVE Health |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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