Correlation Between Sirona Biochem and Theralase Technologies

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

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

Diversification Opportunities for Sirona Biochem and Theralase Technologies

-0.27

Correlation Coefficient

Sirona Biochem  Theralase Technologies

Very good diversification

The 3 months correlation between Sirona and Theralase is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Sirona Biochem Corp and Theralase Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Theralase Technologies and Sirona Biochem 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 Sirona Biochem Corp are associated (or correlated) with Theralase Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Theralase Technologies has no effect on the direction of Sirona Biochem i.e., Sirona Biochem and Theralase Technologies go up and down completely randomly.

Pair Corralation between Sirona Biochem and Theralase Technologies

Assuming the 90 days horizon Sirona Biochem Corp is expected to generate 1.44 times more return on investment than Theralase Technologies. However, Sirona Biochem is 1.44 times more volatile than Theralase Technologies. It trades about 0.03 of its potential returns per unit of risk. Theralase Technologies is currently generating about 0.02 per unit of risk. If you would invest  11.00  in Sirona Biochem Corp on September 14, 2024 and sell it today you would lose (5.50) from holding Sirona Biochem Corp or give up 50.0% of portfolio value over 90 days.

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

Sirona Biochem Corp  vs.  Theralase Technologies

Sirona Biochem Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sirona Biochem Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly stable which may send shares a bit higher in January 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Theralase Technologies

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Theralase Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, Theralase Technologies showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sirona Biochem and Theralase Technologies

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

The idea behind Sirona Biochem Corp and Theralase Technologies 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.