Correlation Between STRATA Skin and Heart Test

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

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

Diversification Opportunities for STRATA Skin and Heart Test

-0.54

Correlation Coefficient

STRATA Skin  Heart Test

Excellent diversification

The 3 months correlation between STRATA and Heart is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding STRATA Skin Sciences and Heart Test Laboratories in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Heart Test Laboratories and STRATA Skin 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 STRATA Skin Sciences are associated (or correlated) with Heart Test. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Heart Test Laboratories has no effect on the direction of STRATA Skin i.e., STRATA Skin and Heart Test go up and down completely randomly.

Pair Corralation between STRATA Skin and Heart Test

Given the investment horizon of 90 days STRATA Skin Sciences is expected to generate 0.5 times more return on investment than Heart Test. However, STRATA Skin Sciences is 2.02 times less risky than Heart Test. It trades about 0.05 of its potential returns per unit of risk. Heart Test Laboratories is currently generating about -0.03 per unit of risk. If you would invest  275.00  in STRATA Skin Sciences on September 30, 2024 and sell it today you would earn a total of  22.00  from holding STRATA Skin Sciences or generate 8.0% return on investment over 90 days.

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

STRATA Skin Sciences  vs.  Heart Test Laboratories

STRATA Skin Sciences

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in STRATA Skin Sciences are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward-looking signals, STRATA Skin may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Heart Test Laboratories

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Heart Test Laboratories has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's fundamental indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with STRATA Skin and Heart Test

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

The idea behind STRATA Skin Sciences and Heart Test Laboratories 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.