Correlation Between Sofwave Medical and Oron Group

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

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

Diversification Opportunities for Sofwave Medical and Oron Group

-0.21

Correlation Coefficient

Sofwave Medical  Oron Group

Very good diversification

The 3 months correlation between Sofwave and Oron is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Sofwave Medical and Oron Group Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oron Group Investments and Sofwave Medical 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 Sofwave Medical are associated (or correlated) with Oron Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oron Group Investments has no effect on the direction of Sofwave Medical i.e., Sofwave Medical and Oron Group go up and down completely randomly.

Pair Corralation between Sofwave Medical and Oron Group

Assuming the 90 days trading horizon Sofwave Medical is expected to under-perform the Oron Group. In addition to that, Sofwave Medical is 1.56 times more volatile than Oron Group Investments. It trades about -0.07 of its total potential returns per unit of risk. Oron Group Investments is currently generating about 0.22 per unit of volatility. If you would invest  84,100  in Oron Group Investments on September 29, 2024 and sell it today you would earn a total of  18,400  from holding Oron Group Investments or generate 21.88% return on investment over 90 days.

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

Sofwave Medical  vs.  Oron Group Investments

Sofwave Medical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Sofwave Medical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Oron Group Investments

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Oron Group Investments are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Oron Group sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Sofwave Medical and Oron Group

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

The idea behind Sofwave Medical and Oron Group Investments 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.

Check out your portfolio center.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.