Correlation Between Crossject and Implanet

Can any of the company-specific risk be diversified away by investing in both Crossject and Implanet 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 Crossject and Implanet into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Crossject and Implanet SA, you can compare the effects of market volatilities on Crossject and Implanet 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 Crossject with a short position of Implanet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Crossject and Implanet.

Diversification Opportunities for Crossject and Implanet

0.21

Correlation Coefficient

Crossject  Implanet

Modest diversification

The 3 months correlation between Crossject and Implanet is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Crossject and Implanet SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Implanet SA and Crossject 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 Crossject are associated (or correlated) with Implanet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Implanet SA has no effect on the direction of Crossject i.e., Crossject and Implanet go up and down completely randomly.

Pair Corralation between Crossject and Implanet

Assuming the 90 days trading horizon Crossject is expected to generate 1.03 times less return on investment than Implanet. But when comparing it to its historical volatility, Crossject is 1.69 times less risky than Implanet. It trades about 0.07 of its potential returns per unit of risk. Implanet SA is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  9.68  in Implanet SA on September 26, 2024 and sell it today you would earn a total of  1.32  from holding Implanet SA or generate 13.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Crossject  vs.  Implanet SA

Crossject

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Crossject has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Implanet SA

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Implanet SA has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable basic indicators, Implanet is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Crossject and Implanet

The main advantage of trading using opposite Crossject and Implanet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Crossject position performs unexpectedly, Implanet 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 Implanet will offset losses from the drop in Implanet's long position.

The idea behind Crossject and Implanet SA 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.

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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.