Correlation Between CONMED and LivaNova PLC

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

By analyzing existing cross correlation between CONMED and LivaNova PLC, you can compare the effects of market volatilities on CONMED and LivaNova PLC 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 LivaNova PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of CONMED and LivaNova PLC.

Diversification Opportunities for CONMED and LivaNova PLC

-0.47

Correlation Coefficient

CONMED  LivaNova PLC

Very good diversification

The 3 months correlation between CONMED and LivaNova is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding CONMED and LivaNova PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LivaNova PLC 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 LivaNova PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LivaNova PLC has no effect on the direction of CONMED i.e., CONMED and LivaNova PLC go up and down completely randomly.

Pair Corralation between CONMED and LivaNova PLC

Given the investment horizon of 90 days CONMED is expected to generate 1.1 times less return on investment than LivaNova PLC. In addition to that, CONMED is 1.41 times more volatile than LivaNova PLC. It trades about 0.04 of its total potential returns per unit of risk. LivaNova PLC is currently generating about 0.06 per unit of volatility. If you would invest  4,958  in LivaNova PLC on August 31, 2024 and sell it today you would earn a total of  290.00  from holding LivaNova PLC or generate 5.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

CONMED  vs.  LivaNova PLC

CONMED

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CONMED are ranked lower than 3 (%) 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.

LivaNova PLC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in LivaNova PLC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, LivaNova PLC may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with CONMED and LivaNova PLC

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

The idea behind CONMED and LivaNova PLC 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.