Correlation Between Anika Therapeutics and Alphatec Holdings

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

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

Diversification Opportunities for Anika Therapeutics and Alphatec Holdings

-0.93

Correlation Coefficient

Anika Therapeutics  Alphatec Holdings

Pay attention - limited upside

The 3 months correlation between Anika and Alphatec is -0.93. Overlapping area represents the amount of risk that can be diversified away by holding Anika Therapeutics and Alphatec Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphatec Holdings and Anika Therapeutics 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 Anika Therapeutics are associated (or correlated) with Alphatec Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphatec Holdings has no effect on the direction of Anika Therapeutics i.e., Anika Therapeutics and Alphatec Holdings go up and down completely randomly.

Pair Corralation between Anika Therapeutics and Alphatec Holdings

Given the investment horizon of 90 days Anika Therapeutics is expected to generate 0.69 times more return on investment than Alphatec Holdings. However, Anika Therapeutics is 1.45 times less risky than Alphatec Holdings. It trades about -0.26 of its potential returns per unit of risk. Alphatec Holdings is currently generating about -0.24 per unit of risk. If you would invest  1,772  in Anika Therapeutics on September 28, 2024 and sell it today you would lose (162.00) from holding Anika Therapeutics or give up 9.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Anika Therapeutics  vs.  Alphatec Holdings

Anika Therapeutics

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Anika Therapeutics has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's forward indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Alphatec Holdings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Alphatec Holdings are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Alphatec Holdings exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Anika Therapeutics and Alphatec Holdings

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

The idea behind Anika Therapeutics and Alphatec Holdings 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.