Correlation Between Sea and Xtant Medical

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

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

Diversification Opportunities for Sea and Xtant Medical

-0.89

Correlation Coefficient

Sea  Xtant Medical

Pay attention - limited upside

The 3 months correlation between Sea and Xtant is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding Sea and Xtant Medical Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtant Medical Holdings and Sea 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 Sea are associated (or correlated) with Xtant Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtant Medical Holdings has no effect on the direction of Sea i.e., Sea and Xtant Medical go up and down completely randomly.

Pair Corralation between Sea and Xtant Medical

Allowing for the 90-day total investment horizon Sea is expected to under-perform the Xtant Medical. But the stock apears to be less risky and, when comparing its historical volatility, Sea is 1.83 times less risky than Xtant Medical. The stock trades about -0.11 of its potential returns per unit of risk. The Xtant Medical Holdings is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  40.00  in Xtant Medical Holdings on September 24, 2024 and sell it today you would earn a total of  0.30  from holding Xtant Medical Holdings or generate 0.75% return on investment over 90 days.

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

Sea  vs.  Xtant Medical Holdings

Sea

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Sea are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady technical and fundamental indicators, Sea exhibited solid returns over the last few months and may actually be approaching a breakup point.

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of inconsistent performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Sea and Xtant Medical

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

The idea behind Sea and Xtant Medical Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.