Correlation Between SANUWAVE Health and Biomerica
Can any of the company-specific risk be diversified away by investing in both SANUWAVE Health and Biomerica 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 SANUWAVE Health and Biomerica into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANUWAVE Health and Biomerica, you can compare the effects of market volatilities on SANUWAVE Health and Biomerica 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 SANUWAVE Health with a short position of Biomerica. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANUWAVE Health and Biomerica.
Diversification Opportunities for SANUWAVE Health and Biomerica
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SANUWAVE and Biomerica is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding SANUWAVE Health and Biomerica in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biomerica and SANUWAVE Health 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 SANUWAVE Health are associated (or correlated) with Biomerica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biomerica has no effect on the direction of SANUWAVE Health i.e., SANUWAVE Health and Biomerica go up and down completely randomly.
Pair Corralation between SANUWAVE Health and Biomerica
Given the investment horizon of 90 days SANUWAVE Health is expected to generate 14.41 times more return on investment than Biomerica. However, SANUWAVE Health is 14.41 times more volatile than Biomerica. It trades about 0.12 of its potential returns per unit of risk. Biomerica is currently generating about 0.01 per unit of risk. If you would invest 938.00 in SANUWAVE Health on November 3, 2024 and sell it today you would earn a total of 1,832 from holding SANUWAVE Health or generate 195.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANUWAVE Health vs. Biomerica
Performance |
| Timeline |
| SANUWAVE Health |
| Biomerica |
SANUWAVE Health and Biomerica Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANUWAVE Health and Biomerica
The main advantage of trading using opposite SANUWAVE Health and Biomerica positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANUWAVE Health position performs unexpectedly, Biomerica 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 Biomerica will offset losses from the drop in Biomerica's long position.| SANUWAVE Health vs. Rafarma Pharmaceuticals | SANUWAVE Health vs. GulfSlope Energy | SANUWAVE Health vs. TSS, Common Stock |
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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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