Correlation Between SANUWAVE Health and Guided Therapeutics
Can any of the company-specific risk be diversified away by investing in both SANUWAVE Health 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 SANUWAVE Health and Guided Therapeutics into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANUWAVE Health and Guided Therapeutics, you can compare the effects of market volatilities on SANUWAVE Health 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 SANUWAVE Health with a short position of Guided Therapeutics. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANUWAVE Health and Guided Therapeutics.
Diversification Opportunities for SANUWAVE Health and Guided Therapeutics
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between SANUWAVE and Guided is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding SANUWAVE Health and Guided Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Guided Therapeutics 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 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 SANUWAVE Health i.e., SANUWAVE Health and Guided Therapeutics go up and down completely randomly.
Pair Corralation between SANUWAVE Health and Guided Therapeutics
Given the investment horizon of 90 days SANUWAVE Health is expected to generate 1.1 times less return on investment than Guided Therapeutics. But when comparing it to its historical volatility, SANUWAVE Health is 2.37 times less risky than Guided Therapeutics. It trades about 0.27 of its potential returns per unit of risk. Guided Therapeutics is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 16.00 in Guided Therapeutics on September 2, 2024 and sell it today you would earn a total of 3.00 from holding Guided Therapeutics or generate 18.75% 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. Guided Therapeutics
Performance |
| Timeline |
| SANUWAVE Health |
| Guided Therapeutics |
SANUWAVE Health and Guided Therapeutics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANUWAVE Health and Guided Therapeutics
The main advantage of trading using opposite SANUWAVE Health and Guided Therapeutics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANUWAVE Health 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.| SANUWAVE Health vs. Brainsway | SANUWAVE Health vs. Venus Concept | SANUWAVE Health vs. Tactile Systems Technology | SANUWAVE Health vs. Icecure Medical |
| Guided Therapeutics vs. Medtronic PLC | Guided Therapeutics vs. CONMED | Guided Therapeutics vs. Glaukos Corp | Guided Therapeutics vs. Integer Holdings Corp |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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