Correlation Between Motus GI and Smith Nephew

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

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

Diversification Opportunities for Motus GI and Smith Nephew

0.79

Correlation Coefficient

Motus GI  Smith Nephew

Poor diversification

The 3 months correlation between Motus and Smith is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Motus GI Holdings and Smith Nephew SNATS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smith Nephew SNATS and Motus GI 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 Motus GI Holdings are associated (or correlated) with Smith Nephew. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smith Nephew SNATS has no effect on the direction of Motus GI i.e., Motus GI and Smith Nephew go up and down completely randomly.

Pair Corralation between Motus GI and Smith Nephew

If you would invest  65.00  in Motus GI Holdings on September 2, 2024 and sell it today you would earn a total of  0.00  from holding Motus GI Holdings or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	1.56%
Values	Daily Returns

Motus GI Holdings  vs.  Smith Nephew SNATS

Motus GI Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Motus GI Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Motus GI is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Smith Nephew SNATS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smith Nephew SNATS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Motus GI and Smith Nephew

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

The idea behind Motus GI Holdings and Smith Nephew SNATS 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.