Correlation Between Retractable Technologies and STRATA Skin

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

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

Diversification Opportunities for Retractable Technologies and STRATA Skin

0.26

Correlation Coefficient

Retractable Technologies  STRATA Skin

Modest diversification

The 3 months correlation between Retractable and STRATA is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Retractable Technologies 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 Retractable Technologies 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 Retractable Technologies 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 Retractable Technologies i.e., Retractable Technologies and STRATA Skin go up and down completely randomly.

Pair Corralation between Retractable Technologies and STRATA Skin

Considering the 90-day investment horizon Retractable Technologies is expected to under-perform the STRATA Skin. But the stock apears to be less risky and, when comparing its historical volatility, Retractable Technologies is 1.2 times less risky than STRATA Skin. The stock trades about -0.18 of its potential returns per unit of risk. The STRATA Skin Sciences is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  322.00  in STRATA Skin Sciences on September 3, 2024 and sell it today you would lose (7.00) from holding STRATA Skin Sciences or give up 2.17% of portfolio value over 90 days.

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

Retractable Technologies  vs.  STRATA Skin Sciences

Retractable Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Retractable Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Even with uncertain performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 very healthy forward-looking signals, STRATA Skin is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Retractable Technologies and STRATA Skin

The main advantage of trading using opposite Retractable Technologies and STRATA Skin positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Retractable Technologies 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 Retractable Technologies 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.