Correlation Between SANUWAVE Health and LivaNova PLC
Can any of the company-specific risk be diversified away by investing in both SANUWAVE Health and LivaNova PLC 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 LivaNova PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SANUWAVE Health and LivaNova PLC, you can compare the effects of market volatilities on SANUWAVE Health and LivaNova PLC 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 LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of SANUWAVE Health and LivaNova PLC.
Diversification Opportunities for SANUWAVE Health and LivaNova PLC
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SANUWAVE and LivaNova is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding SANUWAVE Health and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of SANUWAVE Health i.e., SANUWAVE Health and LivaNova PLC go up and down completely randomly.
Pair Corralation between SANUWAVE Health and LivaNova PLC
Given the investment horizon of 90 days SANUWAVE Health is expected to generate 2.84 times more return on investment than LivaNova PLC. However, SANUWAVE Health is 2.84 times more volatile than LivaNova PLC. It trades about 0.28 of its potential returns per unit of risk. LivaNova PLC is currently generating about 0.07 per unit of risk. If you would invest 2,200 in SANUWAVE Health on October 20, 2024 and sell it today you would earn a total of 450.00 from holding SANUWAVE Health or generate 20.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
SANUWAVE Health vs. LivaNova PLC
Performance |
| Timeline |
| SANUWAVE Health |
| LivaNova PLC |
SANUWAVE Health and LivaNova PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SANUWAVE Health and LivaNova PLC
The main advantage of trading using opposite SANUWAVE Health and LivaNova PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SANUWAVE Health position performs unexpectedly, LivaNova PLC 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 LivaNova PLC will offset losses from the drop in LivaNova PLC'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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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