Correlation Between Axogen and STRATA Skin

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

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

Diversification Opportunities for Axogen and STRATA Skin

-0.31

Correlation Coefficient

Axogen  STRATA Skin

Very good diversification

The 3 months correlation between Axogen and STRATA is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding Axogen Inc and STRATA Skin Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on STRATA Skin Sciences and Axogen 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 Axogen Inc are associated (or correlated) with STRATA Skin. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of STRATA Skin Sciences has no effect on the direction of Axogen i.e., Axogen and STRATA Skin go up and down completely randomly.

Pair Corralation between Axogen and STRATA Skin

Given the investment horizon of 90 days Axogen Inc is expected to generate 0.91 times more return on investment than STRATA Skin. However, Axogen Inc is 1.09 times less risky than STRATA Skin. It trades about 0.05 of its potential returns per unit of risk. STRATA Skin Sciences is currently generating about -0.04 per unit of risk. If you would invest  1,315  in Axogen Inc on August 30, 2024 and sell it today you would earn a total of  92.00  from holding Axogen Inc or generate 7.0% return on investment over 90 days.

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

Axogen Inc  vs.  STRATA Skin Sciences

Axogen Inc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Axogen Inc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very conflicting technical and fundamental indicators, Axogen may actually be approaching a critical reversion point that can send shares even higher in December 2024.

STRATA Skin Sciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days STRATA Skin Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Axogen and STRATA Skin

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

The idea behind Axogen Inc and STRATA Skin Sciences 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.