Correlation Between STRATA Skin and NanoVibronix

Can any of the company-specific risk be diversified away by investing in both STRATA Skin and NanoVibronix 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 NanoVibronix 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 NanoVibronix, you can compare the effects of market volatilities on STRATA Skin and NanoVibronix 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 NanoVibronix. Check out your portfolio center. Please also check ongoing floating volatility patterns of STRATA Skin and NanoVibronix.

Diversification Opportunities for STRATA Skin and NanoVibronix

0.27

Correlation Coefficient

STRATA Skin  NanoVibronix

Modest diversification

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

Pair Corralation between STRATA Skin and NanoVibronix

Given the investment horizon of 90 days STRATA Skin Sciences is expected to generate 0.62 times more return on investment than NanoVibronix. However, STRATA Skin Sciences is 1.6 times less risky than NanoVibronix. It trades about -0.01 of its potential returns per unit of risk. NanoVibronix is currently generating about -0.01 per unit of risk. If you would invest  319.00  in STRATA Skin Sciences on September 21, 2024 and sell it today you would lose (19.00) from holding STRATA Skin Sciences or give up 5.96% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

STRATA Skin Sciences  vs.  NanoVibronix

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.

NanoVibronix

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NanoVibronix has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, NanoVibronix is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with STRATA Skin and NanoVibronix

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

The idea behind STRATA Skin Sciences and NanoVibronix 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.