Correlation Between CONMED and Anika Therapeutics

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

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

Diversification Opportunities for CONMED and Anika Therapeutics

-0.41

Correlation Coefficient

CONMED  Anika Therapeutics

Very good diversification

The 3 months correlation between CONMED and Anika is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and Anika Therapeutics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Anika Therapeutics and CONMED 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 CONMED are associated (or correlated) with Anika Therapeutics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Anika Therapeutics has no effect on the direction of CONMED i.e., CONMED and Anika Therapeutics go up and down completely randomly.

Pair Corralation between CONMED and Anika Therapeutics

Given the investment horizon of 90 days CONMED is expected to generate 0.57 times more return on investment than Anika Therapeutics. However, CONMED is 1.75 times less risky than Anika Therapeutics. It trades about 0.02 of its potential returns per unit of risk. Anika Therapeutics is currently generating about -0.12 per unit of risk. If you would invest  7,411  in CONMED on September 5, 2024 and sell it today you would earn a total of  82.00  from holding CONMED or generate 1.11% return on investment over 90 days.

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

CONMED  vs.  Anika Therapeutics

CONMED

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound primary indicators, CONMED is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

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 conflicting 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.

Pair Trading with CONMED and Anika Therapeutics

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

The idea behind CONMED and Anika Therapeutics 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.