Correlation Between Stryker and Cellink AB

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Can any of the company-specific risk be diversified away by investing in both Stryker and Cellink AB 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 Stryker and Cellink AB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stryker and Cellink AB, you can compare the effects of market volatilities on Stryker and Cellink AB 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 Stryker with a short position of Cellink AB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stryker and Cellink AB.

Diversification Opportunities for Stryker and Cellink AB

-0.68
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Stryker and Cellink is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Stryker and Cellink AB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cellink AB and Stryker 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 Stryker are associated (or correlated) with Cellink AB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cellink AB has no effect on the direction of Stryker i.e., Stryker and Cellink AB go up and down completely randomly.

Pair Corralation between Stryker and Cellink AB

Considering the 90-day investment horizon Stryker is expected to generate 0.46 times more return on investment than Cellink AB. However, Stryker is 2.16 times less risky than Cellink AB. It trades about 0.35 of its potential returns per unit of risk. Cellink AB is currently generating about -0.34 per unit of risk. If you would invest  35,601  in Stryker on August 28, 2024 and sell it today you would earn a total of  3,370  from holding Stryker or generate 9.47% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Stryker  vs.  Cellink AB

 Performance 
       Timeline  
Stryker 

Risk-Adjusted Performance

11 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Stryker are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Stryker may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Cellink AB 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cellink AB has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's forward-looking signals remain nearly stable which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Stryker and Cellink AB Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Stryker and Cellink AB

The main advantage of trading using opposite Stryker and Cellink AB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stryker position performs unexpectedly, Cellink AB 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 Cellink AB will offset losses from the drop in Cellink AB's long position.
The idea behind Stryker and Cellink AB pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.

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